Nordstrom shares got a lift Tuesday after the department store reported that its third-quarter sales picked up more than analysts had anticipated, suggesting it might have a stronger holiday season than some investors expected if trends continue.
Nordstrom shares were up more than 4% in extended trading Tuesday.
Nordstrom CEO Erik Nordstrom said the retailer has made strides with its online business, especially since its stores were temporarily shuttered. Digital sales in the three-month period were $1.6 billion and represented 54% of the retailer’s business.
He said the company is “continuing to amplify categories that are relevant with customers during the pandemic, such as activewear and wellness products. Yet he said it’s also looking toward the future with the Covid-19 vaccine and anticipates “pent-up customer demand, particularly around occasions like travel or in-person social events.”
He said the retailer’s off-price store, Nordstrom Rack, could be a major growth driver because it’s one of the few in this category with a large online presence. The company will expand its inventory, particularly at the lower price point, he said.
Here’s how the company did in the fiscal third quarter ended October 31, compared to what analysts were expecting, based on Refinitiv data:
- Earnings per share: 34 cents vs. a loss of 6 cents expected
- Revenue: $3.09 billion vs. $3.10 billion expected
Nordstrom said its net income fell to $53 million, or 34 cents per share, from $126 million, or 81 cents per share, a year earlier. Analysts surveyed by Refinitiv on average had expected the company to post a loss of 6 cents per share.
Total revenue for the company fell to $3.09 billion from $3.67 billion a year ago, and was lower than the $3.10 billion that analysts were expecting.
Nordstrom was among the retailers that were forced to close their doors in the early days of the coronavirus pandemic. Total sales were down 40% in the first quarter and 53% in the second quarter compared with the same period a year earlier.
In the third quarter, total sales were down only 16%. That includes an approximately 10-percentage point impact from the Anniversary Sale.
“Our Anniversary Sale serves as a strong proof point in our ability to amplify relevant categories, brands and trends to meet shifting customer preferences,” Chief Financial Officer Anne Bramman said during a conference call.
During the quarter, the company said its top performing merchandise categories were activewear, home, beauty and designer.
On the conference call, Bramman said the company expects sales to decrease in the low 20-percentage range in the fourth quarter. But the company expects to deliver positive operating cash flow, she said.
Yet she acknowledged the outlook is uncertain because of the pandemic and said that its expectations are based on stores remaining open.
Read the full earnings release here.