Nordstrom sales fall amid ‘softening’ consumer demand; 17 new Rack stores in works

Nordstrom reported third-quarter profit that topped Street estimates but sales that missed, with declines across both its banners.

But the department store retailer held to its full-year revenue outlook and executives on the earnings call said the company has made progress, with lower markdowns and inventory down by 9%.

“We’ve rightsized our inventory,” Nordstrom president Peter Nordstrom told analysts. “We definitely got it in the right place in terms of the aging and the categories that matter.”

Nordstrom continues to expand its off-price Nordstrom Rack banner, which also saw some improvement during the quarter. The retailer opened 11 new Rack outlets during the quarter and has announced plans for an additional 17 stores (locations listed at end of article.) 

Nordstrom reported third-quarter net income of $67 million, or $.41 cents a share, for the quarter ended Oct. 28, compared to a loss of  $20 million, or $0.13 a share, in year-ago period. Adjusted earnings came to $0.25 a share. Analysts had expected earnings of $0.12 a share.

Revenue slipped 6.8% to $3.32 billion from $3.55 billion, missing estimates of $3.40 billion. Sales fell 9.4% at Nordstrom and were down 1.8% at its off-price banner, Nordstrom Rack. Digital sales decreased by 11.3%.

“In the third quarter we continued to make progress against our priorities, and we're especially pleased with the resulting improvements in gross margin and earnings," stated Erik Nordstrom, CEO, Nordstrom. "Given continued uncertainty and softening consumer spend, we're remaining agile and focused on serving our customers. Thanks to solid execution by our merchants, we're heading into holiday in a favorable inventory position across both banners.”

Nordstrom stuck with its full-year sales outlook for a 4% to 6% drop. It narrowed its adjusted per-share profit estimate to $1.90 to $2.10. In August, the company forecast a profit range of $1.80 to $2.20 a share.

At end of the quarter, the company operated a total of 360 stores, including 258 Nordstrom Rack stores, 93 Nordstrom stores, six Nordstrom Local outposts, two Last Chance clearance outlets and one Asos/Nordstrom Locations. 

Nordstrom has announced plans to open the following Nordstrom Rack stores: