Nordstrom (JWN) Q3 2021 Profit Shortfall, Sales Growth

A customer leaves a Nordstrom store on May 26, 2021 in Chicago, Illinois.

Scott Olson | Getty Images

On Tuesday, Nordstrom reported earnings that fell short of analysts’ expectations as labor costs weighed on profits and sales and its Nordstrom Rack business struggled to return to pre-pandemic levels.

The news drove the company’s shares down more than 23% in extended trading.

The department store chain has tried to take advantage of shoppers updating their wardrobes when people return to offices and social gatherings. In the third quarter, sales exceeded Wall Street estimates, but the company only reiterated its full-year revenue guidance.

The disappointing results stood in stark contrast to those of rivals Macy’s and Kohl’s, which last week raised their forecasts for the rest of the year. Both companies have done better in shifting higher costs onto buyers and careful inventory management.

Chief Executive Officer Eric Nordstrom said the company needs to move faster to capitalize on its strengths and increase its market share.

“We are focused on accelerating our transformation and improving results,” Eric Nordstrom said in a press release.

Here’s how Nordstrom is doing for the three-month period ending October 30, compared to what analysts expected using Refinitiv data:

  • Earnings per share: 39 cents vs. 56 cents expected
  • Revenue: $ 3.64 billion versus $ 3.55 billion expected.

Net income rose to $ 64 million, or 39 cents a share, from $ 53 million, or 34 cents a share, a year earlier. According to a Refinitiv poll, analysts had expected earnings per share of 56 cents.

Revenue, including credit card sales, rose to $ 3.64 billion from $ 3.09 billion a year earlier, beating expectations of $ 3.55 billion. But that’s still slightly lower than Nordstrom’s reported $ 3.67 billion. in the third quarter of 2019

Revenue for the eponymous department store Nordstrom grew 11% year-over-year and 3% in two years. More shoppers came to his stores and shoppers spent more on purchases. Nordstrom cited home goods, outdoor clothing, designer brands and cosmetics as strengths.

At Nordstrom Rack, a non-priced division that competes with TJ Maxx and Macy’s Backstage, sales are up 35% from 2020 but down 8% from 2019.

The company said it is taking steps to improve Rack’s performance, including investing in increased brand awareness, better management of inventory levels, and balancing prices to better align with customer expectations.

Digital sales fell 12% year on year and rose 20% in two years, representing 40% of the business. Nordstrom noted that last year the annual anniversary sale, which takes place mostly online but also in stores, was completely pushed back to the third quarter, while this year it fell by only one week in the quarter.

Nordstrom said its inventories were up 13% over the same period in 2019 as a department store operator extended some product orders to try to mitigate current supply chain bottlenecks.

The company still expects annual revenues, including credit card sales, to grow more than 35% from a year ago. According to Refinitiv, analysts were expecting 36% growth.

Nordstrom shares are up less than 1% year-to-date as of the market close on Tuesday. Its market capitalization is approximately $ 5.1 billion.

Find Nordstrom’s Complete Income Press Release here

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