Nordstrom Inc., navigating through a “challenging” holiday season, said its net sales declined about 22 percent for the nine-week holiday period ended Jan. 2.
However, the company said the combined November and December sales results were in line with expectations for a decrease in the low-20 percent range for the fourth quarter, and that despite the decline, positive earnings before interest and taxes and operating cash flow will be positive for the fourth quarter, which is scheduled to be reported on March 2.
The fourth-quarter EBIT margin will decline by about 500 basis points relative to the year-ago period, primarily due to lower sales volume, Nordstrom said, adding that planned shipping surcharges and premium pay related to the holiday season also contributed to the EBIT margin deleverage.
Digital sales for the holiday season grew 23 percent over last year and represented 54 percent of total sales, compared with 34 percent from the same period in 2019. Business at Nordstrom’s large urban flagships in New York and other cities would have been particularly slow due to the pandemic-related flight of people to the suburbs and other less dense areas.
“We’re encouraged by the increasing momentum throughout and following the holiday season as we continue to unlock new ways to better serve customers on their terms with greater convenience and connection. By leveraging order pickup and store fulfillment capabilities across our two brands of Nordstrom and Nordstrom Rack, we’re seeing benefits to our customers as well as to our business,” Erik Nordstrom, chief executive officer of Nordstrom Inc., said in a statement: “We’re deeply appreciative of our team’s focus on providing customers with a strong holiday offering during these challenging times.”
Shares of Nordstrom fell 3.94 percent to $36.10 after the report on the weak holiday sales was issued Wednesday, but closed Thursday up 1.2 percent to $38.02.
Nordstrom said fourth-quarter sales trends increased sequentially by about 500 basis points relative to the third quarter, after adjusting for the shift of the Nordstrom Anniversary Sale from the second quarter in 2019 to the third quarter in 2020.
The Seattle-based upscale retailer also indicated that December sales at its Nordstrom and Nordstrom Rack brands reflected sequential improvement from November with momentum continuing into January.
More than 30 percent of online orders were fulfilled from Nordstrom and Nordstrom Rack stores.
About 11 percent of nordstrom.com orders were picked up in store, which accelerated to more than 20 percent during the week preceding Christmas. About 9 percent of nordstromrack.com orders were picked up in store, which was enabled by the integration of Nordstrom Rack store and online inventory in October.
Nordstrom said that it expanded its assortment of gifts for the 2020 holiday season, and that gifting items comprised 67 percent of sales, an increase of 600 basis points from the prior year.
The retailer is scheduled to hold a virtual investor event on Feb. 4.