In its latest quarterly results, the bottom-line performance of Nordstrom (NYSE: JWN ) has proved to be stronger than what had been anticipated. Revenue, for instance, rose by 3% to reach a figure of $3.35 billion. This is in contrast to a figure of $3.34 billion which is what had been projected by analysts and investors. Net earnings, on the other hand, increased by 37% to reach a figure of $63 million. As a result, the earnings per share reached $0.37 compared to the $0.27 that had been forecast.
Like most retailers who are heavily invested in brick and mortar stores, Nordstrom did not escape from the effects of consumers increasingly spending more and more online and less in physical stores. In this regard, Nordstrom’s comparable-store sales fell by 0.8% in this quarter compared to a similar quarter a year ago ensuring that the streak of negative comparable sales had proved unstoppable so far.
Respite from online sales
There was significant difference between Nordstrom’s off-price stores and full-line stores and its online stores. Comparable sales in the full-line stores fell by over 6% and this had the effect of causing a 2.3% decline in comparable sales in the full-price segment. In contrast, off-price comparable sales at Nordstrom’s online stores increased by 2.3%. Nordstrom’s online sales comprised 24% of the combined net sales and this was attributable to an 11% growth of sales on Nordstrom.com while Nordstromrack.com saw a growth of 19% in sales.
The best performance for Nordstrom was in the western parts of the country while the best-performing products were women’s and men’s apparel. The credit card unit of the department store chain is also showing promise as credit card revenue rose by 17%.
Some of the measures Nordstrom (NYSE: JWN ) has taken to contain the downturn in the retail sector includes containing costs and this has started to bear fruit. While there was a slight increase in gross margins, overhead expenses declined leading to some growth in operating profit.
Compared to a number of its peers, the real estate portfolio of Nordstrom is smaller and this has ensured that the largest chain of high-end department stores in the United States enjoys more flexibility with regards to how it can adapt to a changing retail landscape.
For its full-year results, Nordstrom (NYSE: JWN ) has projected that net sales will rise by between 3% and 4%. The adjusted EPS is expected to decline between $2.75 and $3.00. Comparable sales in this fiscal year are expected to stay flat.