A customer leaves a Nordstrom store on May 26, 2021 in Chicago, Illinois.
Scott Olson | Getty Images
Nordstrom reported lower earnings than analysts’ expectations on Tuesday as labor costs affected earnings and sales and its Nordstrom Rack business struggled to return to pre-pandemic levels.
The news sent his stalled fall of more than 20% into the extended trade.
The department store chain has tried to take advantage of shoppers to refresh their wardrobes as people return to their offices and at social events. Sales exceeded Wall Street estimates in the third quarter, but the company only reiterated its revenue forecast for the year.
The disappointing performance contrasted sharply with that of rivals Macy’s and Kohl’s, which last week inflated estimates for the rest of the year. Both companies were more successful in passing the higher costs on to buyers and carefully managing inventory.
CEO Erik Nordstrom said the company needs to act faster to capitalize on its strengths and increase its market share.
“We are focused on accelerating our transformation and improving results,” Erik Nordstrom said in a press release.
Here’s how Nordstrom fared in the three-month period ended October 30 compared to what analysts expected, using data from Refinitiv:
- Earnings per share: 39 cents vs. 56 cents expected
- Turnover: 3.64 billion dollars against 3.55 billion dollars expected
Net income reached $ 64 million, or 39 cents per share, from $ 53 million, or 34 cents per share, a year earlier. Analysts were looking for earnings per share of 56 cents, according to a Refinitiv poll.
Revenue, including credit card sales, reached $ 3.64 billion from $ 3.09 billion a year earlier, beating expectations of $ 3.55 billion. But that’s still down slightly from the $ 3.67 billion reported by Nordstrom in the third quarter of 2019.
At the same-name department store brand of Nordstrom, revenue increased 11% from a year ago and 3% on a two-year basis. More customers came to her stores and shoppers spent more per purchase. Nordstrom cited home goods, sportswear, designer labels and beauty as areas of strength.
At Nordstrom Rack, an non-price division that rivals TJ Maxx and Macy’s Backstage, sales are up 35% from 2020 but are down 8% from 2019.
The company said it was taking steps to improve Rack’s performance, including investing in brand awareness, better management of inventory levels and price balancing to further align them with buyers’ expectations.
Digital sales fell 12% year over year and increased 20% over two years, accounting for 40% of the business. Nordstrom noted that last year its annual anniversary sale, which takes place mostly online but also in stores, was moved entirely to the third quarter, while this year it only declined for one week of the quarter. .
Nordstrom said its inventory levels were up 13% from the same period in 2019, due to the department store operator withdrawing some merchandise orders in an attempt to alleviate bottlenecks in course in the supply chain.
He still expects annual revenues, including credit card sales, to increase by more than 35% from last year. Analysts were looking for a 36% increase, according to Refinitiv.
Nordstrom shares are up less than 1% year-to-date, as market closed on Tuesday. Its market capitalization is approximately $ 5.1 billion.
Find the full press release on Nordstrom’s results here.