Nordstrom Falls Short on Quarterly Earnings but Shows Promising Growth in Rack Stores
Nordstrom, the Seattle-based department store operator, recently reported its quarterly earnings, falling short of Wall Street’s expectations. However, the company’s off-price chain, Nordstrom Rack, outperformed the rest of its stores, indicating promising growth in that segment.
Despite the earnings miss, Nordstrom showed sales growth and maintained its full-year forecast. The retailer reported a loss per share of 24 cents, compared to the expected 8 cents, and revenue of $3.34 billion, exceeding the $3.20 billion expected by analysts. Following the announcement, Nordstrom shares dropped about 7% in extended trading.
Nordstrom has been focusing on expanding its Nordstrom Rack stores, opening nine new locations during the quarter and planning to open a total of 22 new stores this year. The off-price chain, known for offering brand-name products at discounted prices, has historically lagged behind competitors like TJX-owned T.J. Maxx and Marshalls. However, in the quarter, Nordstrom Rack showed signs of progress, with comparable sales rising 7.9% year over year, outperforming the company’s flagship brand, which saw a 1.8% increase in comparable sales.
Looking ahead, Nordstrom reaffirmed its earnings forecast of $1.65 to $2.05 for the full fiscal year, with revenue expected to range from a 2% decline to 1% growth from the prior year. The company reported a net loss of $39 million for the quarter, an improvement from the $205 million net loss in the previous year. Nordstrom also highlighted strong double-digit growth in categories like active, kids’, and women’s apparel, as well as high single-digit growth in beauty sales.
In addition, Nordstrom is currently evaluating bids to potentially take the company private, as the Nordstrom family has formed a special committee to review offers. The latest quarterly results mark a significant moment for the company, following the passing of former chairman Bruce Nordstrom, the father of CEO Erik Nordstrom and President Pete Nordstrom.
As Nordstrom, along with other department store rivals, seeks to attract younger consumers and reduce its reliance on aging customers, the company’s strategic focus on Nordstrom Rack and its successful performance in the off-price segment could be key drivers of growth in the coming quarters. Stay tuned to Extreme Investor Network for more insights and analysis on Nordstrom’s latest developments in the retail sector.