Despite posting an unadjusted loss, Nordstrom managed to beat a Wall Street estimate on adjusted sales in its third quarter while topping a revenue estimate at the same time.
Nordstrom posted a net loss in the quarter of $20 million, or 13 cents per diluted share, versus net earnings of $64 million, or 39 cents per diluted share, in the 2021 quarter. With supply chain technology and related asset impairment charge excluded, the company reported adjusted earnings per diluted share of 20 cents. Nordstrom didn’t record any earnings adjustment in the fiscal 2021 quarter.
The company’s adjusted earnings per diluted sales in the 2022 quarter topped a MarketBeat-published analyst consensus estimate of 14 cents while sales came out ahead of a $3.49 billion revenue estimate.
Nordstrom net sales decreased 2.9% to $3.43 billion in the quarter versus the year-earlier period as revenues, which include a credit card contribution, were $3.55 billion versus $3.64 billion in the year-before quarter. Nordstrom’s Anniversary Sale timing, with one week shifting from the third to the second quarter, had a negative impact of about 200 basis points on net sales versus the fiscal 2021 period, the company noted. During the quarter, Nordstrom banner net sales slid 3.4%, which included a negative impact of about 300 basis points from Anniversary Sale timing. Net sales for Nordstrom Rack declined 1.9% versus the year-previous quarter. Digital sales declined 16.4% versus the fiscal 2021 period. The timing shift of the Anniversary Sale had a negative effect on Nordstrom digital sales of about 300 basis points versus the year-before period. The company maintained that reducing store fulfillment for Nordstrom Rack digital orders during the third quarter and sunsetting Trunk Club earlier in fiscal 2022 negatively impacted digital sales by some 700 basis points. Digital sales represented 34% of total sales in the period.
In the third quarter, core categories including men’s and women’s apparel, shoes and designer had the strongest year-over-year growth, as customers continued to shop for occasions, travel, work and holidays.
In a conference call, Erik Nordstrom, the company CEO, said that, across the operation, sales began to soften in June, with the trend being more significant in customer segments with the lowest income profiles.
On another topic, Nordstrom emphasized that the company is working to realize its goal of personalizing the digital experience with discovery supported by a broad product assortment, convenience and connection with company employees and engaging experiences. The company is improving connection with enhanced content, a refreshed shopping experience that includes redesigned product pages and smarter product search capabilities. The company also is working to improve the digital purchase journey with better imagery and product descriptions to help customers make more informed purchase decisions and minimize returns.
“We delivered both topline and bottom-line results in line with our expectations in the third quarter while enhancing our strategic capabilities,” said Nordstrom in introducing the financial results. “When customer demand decelerated in late June, we took action to align inventory and expenses with the changing trends, which has prepared us to navigate the current macroeconomic environment. This quarter our teams continued to advance our Closer to You strategy and supply chain capabilities, as we focus on initiatives to drive profitable growth and achieve our long-term strategic and financial goals.”
