As the founding family pursues a buy-out of the company, Nordstrom posted a deeper-than-expected loss in the first quarter, although sales surpassed Wall Street expectations.
A MarketBeat-published analyst consensus estimate for the first quarter called for a loss of eight cents per share and revenues of $3.19 billion.
Comparable sales gained 3.8% versus the year-past quarter. Nordstrom banner net sales increased 0.6% in the period year over year while comparable sales increased 1.8%. For Nordstrom Rack, net sales increased 13.8% and comps advanced 7.9% in the quarter year over year, the company stated.
Net sales were $3.22 billion, while total revenues, including credit card-related income, were $3.34 billion, versus $3.06 billion and $3.18 billion, respectively, in the year-before quarter. Digital sales decreased by 0.2% compared with year-previous quarter and represented 34% of total sales.
Nordstrom pointed out that gross profit as a percentage of net sales decreased by 225 basis points to 31.6% year over year, with strength in first-quarter sales offset primarily by timing matters related to higher loyalty activity and reserves, as well as external theft in the company transportation network and inventory cleanup in the Nordstrom supply chain as it consolidates facilities.
In April, the Nordstrom board of directors announced that it has formed a special committee charged with evaluating a purchase of the company by founding family members.
“The positive sales growth we saw across the company in the first quarter is very encouraging, and we’re particularly excited about the progress that our Rack banner is making,” said Erik Nordstrom, the company’s CEO, in announcing the financial results. “While we’re pleased with our topline growth, profitability fell short of our expectations. Looking ahead, our strong sales performance gives us momentum heading into the rest of the year and the confidence to reaffirm our 2024 guidance.”
Pete Nordstrom, the company’s president, noted, “We’re set up well going forward in regards to the health of our inventory, both in managing levels and providing compelling content with good sell-through. As we reflect on the legacy that our dad left behind, we’ve been reminded of his firmly held and consistent values, especially his commitment to serving our customers. Those values have been integral to Nordstrom’s growth, and they remain at the core of the decisions we make as a company.”
In a conference call, Pete Nordstrom maintained that the timing-related impacts were largely due to a higher-than-expected increase in reserves as the company grew inventory throughout the first quarter off the seasonal low at the end of the 2023 fourth quarter and ahead of the annual anniversary sale set for July 15. He said the first quarter headwind should moderate and partially reverse in future periods as inventory levels and the corresponding reserves change. He added that Nordstrom is learning to better plan and forecast for those factors. The other timing-related impact arose from the better-than-expected growth in sales to Nordstron’s Nordy Club members, resulting in loyalty-related deferred revenue that will drive sales and profit in future periods.
