Nordstrom shares rise because the retailer reveals indicators of restoration supported by the anniversary sale

Pedestrians pass outside a Nordstrom Inc. store in the Midtown neighborhood of New York on March 20, 2020.

Gabby Jones | Bloomberg | Getty Images

Nordstrom stock rebounded Tuesday after the department store reported that third-quarter sales rose faster than analysts had expected, suggesting that the holiday season may be stronger than some investors expected if trends continue .

Nordstrom shares rose more than 4% in extended trading on Tuesday.

Erik Nordstrom, Nordstrom CEO, said the retailer has made strides in online business, especially since stores were temporarily closed. Digital revenue for the three month period was $ 1.6 billion, accounting for 54% of retail sales.

He said the company “continues to expand categories that are relevant to customers during the pandemic, such as active clothing and wellness products. However, he said it is also looking to the future with the Covid-19 vaccine and” anticipating pent-up customer demand. ” especially on occasions such as travel or personal social events. “

He said the retailer’s off-price business, Nordstrom Rack, could be a major growth driver as it is one of the few in its category with a large online presence. The company will expand its inventory, especially at the lower price in its stores, he said.

Here’s how the company performed in the third fiscal quarter ended October 31, compared to analysts’ expectations based on refinitive data:

  • Earnings per share: 34 cents compared to an expected loss of 6 cents
  • Revenue: $ 3.09 billion versus $ 3.10 billion expected

According to Nordstrom, net income fell from $ 126 million, or 81 cents per share last year, to $ 53 million, or 34 cents per share. Analysts surveyed by Refinitiv had expected an average loss of 6 cents per share.

Total revenue for the company declined to $ 3.09 billion from $ 3.67 billion a year ago, and was below what analysts had expected to be $ 3.10 billion.

Nordstrom was among those retailers who were forced to close their doors in the early days of the coronavirus pandemic. Total sales decreased 40% in the first quarter and 53% in the second quarter compared to the same period last year.

In the third quarter, total sales only decreased 16%. This includes an impact of around 10 percentage points from the anniversary sale.

“Our anniversary sale is strong evidence that we can expand relevant categories, brands and trends to meet changing customer preferences,” said CFO Anne Bramman during a conference call.

During the quarter, the company said its top performing merchandise categories were active wear, home living, beauty, and designer.

On the conference call, Bramman said the company expects fourth quarter revenue to decline in the low 20 percent range. However, the company expects a positive operating cash flow.

However, she admitted the outlook is uncertain due to the pandemic and said her expectations are based on the stores remaining open.

Read the full results publication here.

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