Nordstrom, the Seattle-based upscale department store, has reported a decline in sales and profits for its fiscal second quarter, in line with other department store peers who are struggling with cautious consumer spending. However, despite the decrease, Nordstrom’s results exceeded expectations on Wall Street. The company also reaffirmed its financial annual outlook, leading to a 4% rise in its stock during after-hours trading.
One of the factors that affected Nordstrom’s sales was the timing of its anniversary sale, with one week falling into the third quarter this year compared to just one day in 2022. Additionally, last year’s results included a full quarter of sales from its Canadian operations, which the company phased out in June of this year.
During the fiscal second quarter, Nordstrom reported a net income of $137 million (£109 million), or 84 cents per share. This compares to $126 million (£100 million), or 77 cents per share, in the same period last year. Total sales for the quarter fell 7.9% to $3.77 billion (£2.99 billion) from $4.09 billion (£3.25 billion). Analysts had expected earnings of 45 cents per share on $3.67 billion (£2.91 billion) in sales, according to FactSet.
Looking ahead, Nordstrom anticipates a revenue decline of 4% to 6% for the year compared to the previous year. It also expects earnings per share between $1.80 and $2.20, excluding charges related to the wind-down of its Canadian operations. Analysts, on the other hand, anticipate earnings of $1.98 per share, according to FactSet.
Nordstrom’s results follow those of Kohl’s, which reported a nearly 60% drop in profits due to weak second-quarter sales. Macy’s, too, stated that it had to offer discounts on its spring goods to make space for autumn and holiday merchandise, as customers’ spending remained subdued.
These reports come at a time when shoppers are grappling with high inflation and rising interest rates, which have made it more expensive to finance large purchases such as cars and houses or carry debt on credit cards. Macy’s also mentioned a faster-than-anticipated increase in credit card delinquencies, indicating further financial pressure on consumers in the second half of the year. Moreover, many stores are expressing uncertainty about the end of the student loan moratorium, which had provided some financial relief to college students.
Despite the challenges faced by the department store industry, Nordstrom’s ability to surpass expectations and maintain its financial outlook demonstrates its resilience in the face of a cautious consumer market. As the year progresses, it remains to be seen how these factors will continue to impact the retail sector and whether Nordstrom can sustain its positive momentum.