Nordstrom said Tuesday its net sales fell 53% during the second quarter, as its stores took a hit from being temporarily closed during the coronavirus pandemic, and its online business suffered due to a shift in timing of its annual Anniversary Sale.
The company said its stores, including its off-price Nordstrom Rack locations, were closed for about 50% of the days in the latest quarter, dragging down results. Its profitability also was hurt as it elevated discounts to stay competitive, and overall it sold less clothing to customers staying put and working from home.
Nordstrom shares fell about 6% in after-hours trading.
Here’s how the retailer did during its fiscal second quarter, compared with what analysts were expecting, based on Refinitiv data:
- Loss per share: $1.62 vs. a loss of $1.48 expected
- Revenue: $1.86 billion vs. $2.38 billion expected
For the period ended Aug. 1, Nordstrom swung to a loss of $255 million, or $1.62 per share, from net income of $141 million, or 90 cents a share, a year ago. Analysts had been calling for a loss of $1.48 per share.
Revenue, which includes sales from credit cards, fell to $1.86 billion from $3.87 billion a year ago, short of the $2.38 billion that analysts estimated. Net sales fell 53% to $1.78 billion from $3.78 billion one year earlier.
At its full-price stores, net sales were down 58% from a year ago, while its off-price business suffered a decline of 43%.
Online sales fell 5%, due in large part to the department store chain moving its popular Anniversary Sale that is typically held in July into the third quarter. Excluding this impact, the company said digital sales were up roughly 20% during the period.
“We’re confident that we can improve sales trends in the second half of the year and beyond,” President Pete Nordstrom said in a statement. However, the company didn’t offer an outlook for the remainder of the year.
So far, sales from its Anniversary event, which kicked off to all customers on Aug. 19, are tracking in line with its internal expectations, “reflecting improvement in underlying trends relative to July.”
During a conference call with analysts, Chief Financial Officer Anne Bramman said the company is planning for “sequential and gradual improvement in sales, earnings and cash flow” in the second half of 2020.
Looking toward the all-important holiday season, many retailers have said they are expecting consumers to begin shopping earlier than ever this year amid the uncertainty of the coronavirus pandemic and the potential for stores to shut down again in the winter months.
Pete Nordstrom said Tuesday that the department store chain is prepared to stock its stores with holiday gifts before Thanksgiving.
“We’ve had this long-held tradition that we don’t decorate our stores [until] after Thanksgiving … but that doesn’t mean that we shouldn’t be in a position of selling customers what they want, when they want it,” he said.
Four major department store chains — J.C. Penney, Neiman Marcus, Stage Stores and Lord & Taylor — have filed for bankruptcy during the pandemic, with the category reeling from malls being less trafficked by shoppers, and more consumers stocking up at big-box stores like Target and Walmart. Both Target and Walmart have reported impressive results in recent days, while mall-based companies are seen struggling to stay afloat.
While Nordstrom has fared better, it is still working to adjust the size of its business. Earlier this year, it announced the closure of 16 department stores, as the Covid-19 crisis took a toll on its business.
Retail rival Macy’s is set to report earnings next week, while Kohl’s last week said its fiscal second-quarter sales were down 23%. But Kohl’s digital sales soared 58%. Like Target and Walmart, it has benefited during the pandemic from having stores located away from traditional shopping malls, where more people are ordering online and opting to pick items up curbside in parking lots.
Nordstrom typically has been the strongest player in the department store space. But with apparel sales in a free fall, the company is having to lean into other categories like home. It said its strongest segments during the latest quarter included kids merchandise, activewear and beauty.
“As we emerge from this disruptive period, our ambition is for Nordstrom to be positioned as a retail winner by gaining market share and driving profitable growth,” CFO Bramman said.
Nordstrom’s stock is down about 62% this year, as of Tuesday’s market close. The company has a market cap of $2.4 billion.
Find the full earnings press release here.