Shoppers leave and enter a Nordstrom store, in Indianapolis.

Nordstrom Inc., seeing sales gains across all selling channels, said its second-quarter net earnings rose to $162 million, or 95 cents a share, compared with $110 million, or 65 cents, during the same period last year.

The results topped both the store’s and analysts’ expectations, and triggered a 13 percent rise in after-hours trading. Other major retailers this week also reported strong results, including Macy’s Inc. and Walmart Inc., though J.C. Penney Co. Inc. showed disappointing numbers.

“We remain on track for 2018 to be an inflection point for profitable growth,” Blake Nordstrom, copresident, said during Thursday’s conference call on the second quarter. “We are confident in our path forward.”

In addition to the higher sales volume, earnings were helped by a lower tax rate and the impact of a “new revenue recognition standard as it relates to the timing of the Anniversary Sale.”

Nordstrom’s popular Anniversary sale, which features new fall merchandise on sale for two weeks before reverting to full price, this year ran from July 20 through Aug. 5. In this year’s Anniversary Sale, there was a meaningful change in the assortment to more wear-now merchandise, such as sandals, knits and tops, and less fall-winter goods, such as boots and coats. Unprecedented demand on the sale’s first day crashed the web site, but Nordstrom compensated shoppers by offering 10 points per dollar spent that day.

Nordstrom’s new “local market” strategy is being tested in Los Angeles, the retailer’s biggest-volume market. Nordstrom plans to open Nordstrom Local units in Brentwood and in downtown L.A. this fall and is believed to be eyeing the format for other parts of the country. Nordstrom Local stores are smaller units that offer services such as picking up online orders, alterations, reserving products and personal styling, while there is no merchandise on display. The first Nordstrom Local opened in October 2017 on Melrose Avenue in L.A.

Nordstrom Rack, which experienced some slowing recently, improved last quarter largely because of better traffic and inventory management, and having seized opportunities in women’s on seasonable items and fashion. Rack’s first three stores opened in Canada last spring, and three more are opening in the fall. “Rack stores play a really critical role in allowing us to have a great flow of newness in our full-price stores,” said Blake Nordstrom. “We are exceeding expectations in those three Rack stores.”

Little was said about Nordstrom’s men’s store opened in April on 57th Street in Manhattan, other than executive vice president Jamie Nordstrom indicating, “We are learning a lot about operating a men’s-only store and traffic trends in New York and we are mostly encouraged about the qualitative response from customers and people in the industry.”

There was no discussion about last year’s failed attempt to take the company private.

Earnings before interest and taxes were $246 million, or 6.2 percent of net sales, compared with $217 million, or 5.8 percent of net sales, during the same period in fiscal 2017.

Nordstrom said the increase in EBIT included $30 million primarily due to the impact of how the revenues on the Anniversary Sale were recognized. But that will have a $30 million negative impact on the third quarter, the company noted.

Comparable sales were up 4 percent overall and 4.1 percent at full-price stores. The top-performing merchandise categories were kids’ apparel and beauty. In off-price, comparable sales increased 4 percent.

Based on first-half results, Nordstrom raised its full-year sales and earnings guidance. Earnings per diluted share are expected to reach $3.50 to $3.65. The prior outlook was for $3.35 to $3.55 per share.

Total sales are seen reaching $15.4 billion to $15.5 billion, compared with the previous forecast of $15.2 billion to $15.4 billion. Comparable sales are seen growing 1.5 to 2 percent, whereas the previous forecast was for a 0.5 to 1.5 percent gain.

EBIT is seen reaching $925 million to $960 million, compared to the previous forecast of $895 milllion to $940 million.

Last quarter, total sales increased 7.1 percent. Digital sales increased 23 percent, and represented 34 percent of second-quarter sales, up from 29 percent a year ago.

For the upcoming holiday season, “the ongoing casualization of America will play out,” said copresident Pete Nordstrom. “Our inventories are in relatively good shape and we are in a position where we can react.”

Nordstrom, which has a small home business, recently launched a collaboration with Anthropologie Home for home decor. “We are really open to ideas and collaborating with people,” said Pete Nordstrom.

load comments
blog comments powered by Disqus