Nordstrom Boosts Wall Street Expectations with Increased 3rd Quarter Sales and Profits
Key Takeaways:
•Sales Growth Across Categories: Q3 saw strong growth in women’s apparel, activewear, shoes, men’s apparel, and kids’ categories, with notable performance from brands like Vince, Veronica Beard, On Running, and Hoka.
•Better-Than-Expected Earnings: Net sales rose 4.6% to $3.35 billion, with adjusted earnings of 33 cents per share exceeding analyst expectations of 21 cents.
•Nordstrom Rack Momentum: Off-price division Nordstrom Rack posted a 10.6% increase in net sales and a 3.9% rise in comparable sales.
•2024 Guidance Lifted: Nordstrom revised its 2024 revenue forecast to flat to 1% growth, reflecting cautious optimism for the holiday season.
•Continued Investments: Enhancements to the mobile app and focus on curated brand assortments position the retailer for holiday success.
Nordstrom Inc. exceeded Wall Street expectations in the third quarter, reporting stronger-than-anticipated growth across key categories like women’s apparel, activewear, and footwear. Net sales for the upscale retailer increased by 4.6% to $3.35 billion, outpacing analyst predictions of less than a 1% gain.
The standout performance extended to Nordstrom Rack, the company’s off-price division, which saw a 10.6% rise in net sales and a 3.9% increase in comparable sales. Company-wide comparable sales rose 4%, signaling positive momentum heading into the crucial holiday season.
Revenue Growth and Brand Momentum
Women’s apparel and activewear posted double-digit growth during the quarter, with brands like Vince, Veronica Beard, and On Running driving sales. Men’s apparel, shoes, and kids’ categories recorded mid- to high-single-digit growth.
“Our third-quarter results demonstrate that our strategic focus on curating a compelling brand assortment is resonating with customers,” said Pete Nordstrom, president of Nordstrom. He credited the company’s strong performance to enhancements in customer service and mobile app capabilities, including personalized product recommendations and integrated loyalty features.
Nordstrom’s CEO Erik Nordstrom echoed this optimism while acknowledging a slowdown in early Q4. “The continued sales growth across the company and strong gross margin in the third quarter indicate our team’s focus and efforts are working,” he said.
Financial Highlights
Despite a year-over-year dip in net earnings to $46 million from $67 million, Nordstrom reported improved operating profits and higher-than-expected adjusted earnings of 33 cents per share. Adjusted EBIT increased to $97 million, up from $77 million in the prior year.
Gross merchandise value grew by 5.3%, with the company attributing the gains to fresher brand assortments and strategic investments in the Rack division.
Revised Guidance for 2024
In light of the Q3 performance, Nordstrom raised its sales guidance for 2024. Revenue, including retail and credit card sales, is now projected to be flat to 1% growth, compared to a previous forecast of a 1% decline to a 1% gain. Comparable sales are expected to grow 1% to 2%, up from an earlier flat to 2% range.
The retailer maintained its forecast for EBIT margin, adjusted EBIT margin, and earnings per share, which remain at $1.40 to $1.70.
As the company navigates a competitive retail landscape, Nordstrom’s focus on enhancing the customer experience and investing in its off-price segment positions it to meet evolving consumer demands.