Nordstrom reported better-than-expected first-quarter sales on Tuesday as shoppers returned to their stores to purchase new shoes, sunglasses and swimwear for social outings.
However, in expanded trading, the stock fell roughly 7% as the retailer posted a better-than-expected loss and maintained its outlook for the full year despite other retail competitors having raised their forecasts in the past few days.
Management said increased labor and shipping costs, in addition to supply chain constraints in the apparel industry, are putting continued pressure on business.
This is how Nordstrom developed in the period up to May 1, compared to the analysts’ expectations based on refinitive data:
- Loss per share: $ 1.05 versus 57 cents expected
- Revenue: $ 3.01 billion versus $ 2.90 billion expected
Nordstrom reported a loss of $ 166 million, or $ 1.05 per share, for the period ended May 1, compared to a loss of $ 521 million or $ 3.33 per share last year. That was larger than the 57 cents per share loss analysts had expected based on refinitive data.
Total sales were $ 3.01 billion compared to $ 2.12 billion in the previous year. That exceeded expectations for $ 2.90 billion.
Net sales excluding credit card revenue increased 44% from the same period last year, when Nordstrom’s stores were closed for about half of the quarter due to restrictions during the Covid pandemic. However, net sales decreased 13% compared to the same period last year.
The company has added 20% more items to the selection compared to two years ago as it invests more in the Home, Active, and Kids categories.
At Nordstrom’s full price brand, net sales increased 37% year over year, but declined 13% year over year. Nordstrom Rack’s net sales increased 59% year over year but also decreased 13% on a two-year basis.
Neil Saunders, managing director of GlobalData Retail, pointed out that Nordstrom Rack’s results are lagging behind those of competitors TJX and Ross Stores, both of which have returned to pre-pandemic levels.
“The entire off-price segment is in the midst of a significant growth spurt as the consumer economy reopens,” Saunders said in a statement to customers. “In our view, Nordstrom Rack is simply not as involved in this boom as any other.”
Nordstrom’s digital revenue increased 23% from 2020 and increased 28% from the same period last year. Nordstrom stated that its e-commerce business represented 46% of total sales in the most recent quarter.
Nordstrom said the number of people completing their purchases rose 15% from 2019 as more customers came to the website and stores to buy something.
CEO Erik Nordstrom noted the continued strength of both its Nordstrom stores and its affordable Nordstrom rack business, which caters to more cost-conscious customers, for year-over-year sales growth. He said the company is optimistic that it will benefit from “pent-up demand” in the coming summer months.
The company’s annual anniversary sale is slated for the second quarter of this year, he added, which should aim to get more Americans to return to pre-pandemic activities and refresh their wardrobes.
Nevertheless, the department store chain confirmed its outlook for the 2021 financial year, which envisages sales growth of more than 25%. It also expects digital to power half of its business by the end of the year.
Retailers Macy’s and Kohl’s recently reported first-quarter earnings that beat Street’s estimates and raised their respective outlooks for 2021.
“Although there are still significant uncertainties regarding Covid-19, we remain confident that we can meet our targets for 2021 and generate profitable sales growth as demand recovers,” said CFO Anne Bramman in pre-prepared remarks.
At the close of trading on Tuesday, Nordstrom shares were up around 17% since the start of the year. It has a market capitalization of $ 5.8 billion.
The full press release on Nordstrom’s results can be found here.