Nordstrom (JWN) reports Q2 2022 results

Shoppers leave a Nordstrom store on May 26, 2021 in Chicago, Illinois.

Scott Olson | Getty Images News | beautiful pictures

Nordstrom Tuesday cut its financial forecast for the full year as the department store chain faces an inventory glut and slowing demand.

The retailer’s downgraded forecast came even as it reported fiscal second-quarter earnings and sales ahead of analysts’ estimates. Its shares fell 14% in extended trading. At the beginning of the day, Macy’s also cut its full-year outlooksaid it hopes that declining consumer spending on discretionary items like clothing will force them to use heavy discounts to move items off shelves.

“Customer traffic and demand declined significantly starting late June, primarily at Nordstrom Rack,” Nordstrom CEO Erik Nordstrom said in a statement. “We are adjusting our plans and taking action to navigate this dynamic in the short-term, including adjusting inventory and costs to recent trends.”

Nordstrom now sees year-over-year sales, including credit card revenue, up 5% to 7%, compared with the previous range calling for a 6% to 8% increase. It called for adjusted earnings per share to be between $2.30 and $2.60, down from a previous forecast of $3.20 to $3.50.

Analysts were looking for adjusted earnings per share of $3.04, with year-over-year revenue growth of 6.7%, according to Refinitiv data.

Here’s how Nordstrom did in its fiscal second quarter compared to what analysts had predicted, based on Refinitiv estimates:

  • Earnings Per Share: Adjusted 81 cents vs. 80 cents expected
  • Revenue: $4.1 billion vs. $3.97 billion expected

Nordstrom’s net income for the three-month period ended July 30 increased to $126 million, or 77 cents a share, from $80 million, or 49 cents a share, a year earlier .

Revenue increased to $4.10 billion from $3.66 billion; Digital sales grew 6.3%, accounting for 38% of total revenue.

Nordstrom says its men’s apparel division posted the strongest growth year-over-year in 2021, with shoe, womenswear and beauty pre-orders increasing by double digits as shoppers search for outfits for newcomers. special occasion.

Net sales for the Nordstrom banner grew 14.7%, partly driven by the timing of the company’s annual anniversary sale. At Nordstrom Rack, the company’s discount banner, net sales were up 6.3% year over year but down from pre-pandemic levels.

Nordstrom Rack competes with retailers like TJ Maxx and Ross Storeand it targets more lower-income customers who are pressured by higher inflation than the company’s full-price banner.

Management said in a conference call Tuesday that it plans to reorder merchandise at Nordstrom Rack to include more of the premium brands shoppers are looking for.

Company-wide inventory levels were up nearly 10% year over year, thanks to growth in both banners. Nordstrom said it aims to be “clean” of current inventory levels by the end of the third quarter.

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