Nordstrom Q2 results get boost from sales event and turnaround efforts
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Nordstrom posted a second-quarter profit that topped estimates on Aug 27.
PHOTO: AFP
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BENGALURU - Nordstrom posted a second-quarter profit that topped estimates on Aug 27, with sales propped up by its crucial Anniversary Sale event, sending its shares up nearly 7 per cent after the bell.
The upmarket department store chain also raised the lower end of its annual comparable sales growth forecast to between flat and 2 per cent from a prior view of a 1 per cent drop to 2 per cent rise.
The Seattle-based company aims to revitalise the business by focusing on high-demand categories such as women’s apparel to boost its profit margins. It has also reduced discounts and is selling more items at full price.
“Anniversary sales were driven by newness and fall fashion... including our Nordstrom private brands,” president Pete Nordstrom said.
The event, which ran from July 15 to Aug 4, saw strong demand for sportswear brands, including On Holding, New Balance, and Vuori, as well as beauty products.
Its off-price brand, Rack, also drove sales, and the company plans to open 12 additional Rack locations in the country before the holiday shopping season begins.
“Opening more Rack stores is a major part of Nordstrom’s current plan, so the positive sales certainly suggested that plan is working pretty well... Merchandising is probably working better at Rack too,” Morningstar analyst David Swartz said.
Affluent shoppers continue to spend, albeit at a slower pace, benefiting apparel chains such as Abercrombie & Fitch and Gap.
In contrast, rival Macy’s lowered its annual net sales forecast last week, blaming higher promotions and weaker demand. Peer Kohl’s is set to report earnings on Aug 28.
Nordstrom’s shares have declined approximately 3 per cent over the past month. Analysts cited muted demand during the sale period, with Placer.ai foot traffic data suggesting July was the quarter’s weakest month.
The stock is up about 16 per cent in 2024 compared with a roughly 18 per cent rise in the broader S&P 500 index.
Total revenue at the company rose 3.2 per cent to US$3.89 billion (S$5.06 billion) in the quarter ended Aug 3, from US$3.77 billion a year earlier, almost in line with analysts’ average expectation of US$3.90 billion, according to LSEG data.
On an adjusted basis, Nordstrom earned 96 US cents per share, compared with expectations of 71 US cents. REUTERS
