Nordstrom Inc . (NYSE:JWN) reported Q3 2023 earnings, highlighting improved performance of Nordstrom Rack, better inventory management, and optimized supply chain despite a decrease in net sales. The company has opened 19 new Rack stores throughout the year, with the Rack’s digital channel now turning profitable. Leadership changes were announced alongside the addition of a new board member. Nordstrom is looking forward to a promising holiday season and has implemented strategies to enhance customer experience and boost sales.
Key takeaways from the earnings call include:
Nordstrom reported Q3 revenue of $3.3 billion, earnings per share of $0.41, and adjusted earnings per share of $0.25.
The company opened 11 new Nordstrom Rack stores in Q3 and one in Q4, making a total of 19 new stores in the year.
The Rack’s digital channel is now profitable on a year-to-date basis.
Despite lower net sales, Nordstrom reported a year-over-year increase in gross margin and earnings per share.
Nordstrom Rack sales decreased by 2%, while digital sales decreased by 11%.
The company expects full-year revenue to decline by 4-6% compared to 2022 and aims for an adjusted EBIT margin of 3.8-4.1% for the full year.
Nordstrom executives emphasized the company’s solid financial position and its focus on reducing leverage, investing in the business, and returning cash to shareholders.
During the call, Nordstrom executives discussed the company’s success in reducing SG&A expenses through supply chain initiatives, resulting in a 100 basis point improvement over the past four quarters, and an additional 50 basis point improvement in the current quarter. However, they acknowledged the challenge of offsetting inflation with productivity improvement in the coming year.
Regarding the performance of Nordstrom and Nordstrom Rack banners, executives noted sequential improvements in the Rack business due to better inventory management and supply chain enhancements. They also reported a return to stores for the Nordstrom banner, while the digital business faced pressure.
Peter Nordstrom, during the call, highlighted the company’s solid execution and its readiness to provide faster delivery for the holiday season. He also discussed the company’s focus on improving its women’s apparel offerings and the intention to invest more in its own label programs, which have seen a 30% year-over-year increase in sell-throughs.
Cathy Smith, another executive, discussed gross margin improvements driven by inventory productivity and stated that the company expects favorable markdowns in the fourth quarter compared to the previous year due to a healthy inventory position.
Nordstrom plans to release its 2024 guidance in the future. The company’s ticker on the exchange is NYSE:JWN.
