Nordstrom, the Seattle-based department store operator, reported its fiscal first-quarter results, falling short of Wall Street’s earnings expectations. However, the company posted sales growth and maintained its full-year forecast. Despite the overall earnings miss, Nordstrom Rack, the company’s off-price chain, outperformed its flagship brand, showing signs of progress.
In terms of earnings per share, Nordstrom reported a loss of 24 cents, compared to the expected 8 cents. However, revenue came in at $3.34 billion, surpassing the expected $3.20 billion. Following the announcement, Nordstrom’s shares slid about 7% in after-hours trading.
Nordstrom has been relying on its off-price chain, Nordstrom Rack, to drive growth. The company has been actively opening new Rack stores, with nine added during the quarter and plans for a total of 22 new stores this year. However, Rack has faced tough competition from rivals like TJX-owned T.J. Maxx and Marshalls.
Despite the competition, Nordstrom Rack showed improvement in the quarter, with comparable sales rising 7.9% year over year. In comparison, the flagship brand’s comparable sales climbed 1.8%. This performance highlights the positive impact of Nordstrom’s focus on its off-price offerings.
Looking ahead, Nordstrom reaffirmed its earnings guidance for the full fiscal year, expecting a range of $1.65 to $2.05 per share. The company also anticipates a decline of 2% to a growth of 1% in full-year revenue compared to the previous year.
Nordstrom’s performance in the quarter was led by activewear sales, which saw double-digit growth. Customers showed strong interest in brands like Adidas, Vuori, and Hoka. Additionally, kids’ and women’s apparel experienced double-digit growth, while beauty sales increased by high single digits.
The company’s quarterly results come at a time when the Nordstrom family is once again considering taking the company private. Last month, the family formed a special committee to evaluate bids. This decision follows the passing of former chairman Bruce Nordstrom, the father of CEO Erik Nordstrom and Pete Nordstrom.
Like other department store retailers, Nordstrom is focused on attracting younger consumers as it relies on an aging customer base. This strategy is crucial for the company’s long-term growth and sustainability.
In conclusion, while Nordstrom missed earnings expectations for the quarter, its off-price chain, Nordstrom Rack, showed promising progress. The company’s focus on expanding its Rack stores and appealing to younger consumers will be key in driving future growth. Additionally, Nordstrom’s strong performance in activewear, kids’ and women’s apparel, and beauty sales indicates successful strategies within these segments. As the company continues to evaluate going private, it will need to navigate the ever-changing retail landscape to ensure its continued success.
