New Balance, Hoka and On Help Fuel Active Sales at Nordstrom in Q3
Nordstrom Inc. saw progress in its third quarter financial report — and footwear helped drive solid results in the active category.
On the company’s earnings call on Tuesday, Pete Nordstrom, president and chief brand officer of Nordstrom Inc., noted that the majority of the retailer’s categories “improved sequentially” from the second quarter.
“Active sales growth was led by footwear, driven by New Balance, Hoka and On Running, and in apparel, Vuori,” Nordstrom told analysts on the call. “Beauty was strong at both [Nordstrom and Nordstrom Rack] as well, driven by designer brands and fragrance. Beauty has been a consistently solid performing category for us and continues to be a top trip driver.”
Nordstrom added that the company is “gaining traction” with its private label brands — which are more profitable with lower return rates — suggesting a perceived good value by consumers.
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But, consistent with trends all year, Nordstrom said that its designer category “remains pressured,” primarily in shoes and handbags. “We continue to right-size our inventory to meet that demand,” the executive said. “Looking ahead, we expect to end the year with an improved inventory position in this category.”
Pressed further by analysts, Nordstrom added that the company’s designer business is “normalizing” and “stabilizing” relative to what’s happening in the market. “If you look at it over multiple years, we’re still doing more business in designer now year-to-date in 2023 than we did year-to-date in 2019,” Nordstrom said. “So, while it has come back from some of the heights that we had in the last couple of years, we would view that really more as normalizing. And I think that’s natural given the big run-up we had there for a while.”
Heading into holiday, Nordstrom added that the company is “optimistic and pleased” that its offering strikes the right balance of newness and relevance that its customers want. “We’ve launched a number of efforts to drive sales and create memorable experiences,” the exec said. “From a merchandise perspective, we’re offering more newness than we had at this time last year. And we’re investing in hot brands and products. For example, we’ve [invested more heavily] in holiday favorite Ugg, and we’ve leaned into beauty gift sets, cashmere sweaters, and affordable stocking stuffers.”
In the third quarter, the Seattle-based retailer reported net earnings of $67 million, or earnings per diluted share of 41 cents, compared to a net loss of $20 million, or 13 cents, in the year-ago period. Earnings before interest and taxes were $102 million, compared to $3 million in the year-ago period.
Net sales decreased 6.8 percent versus the same period in fiscal 2022. Gross merchandise value decreased 7.1 percent. Third-quarter net sales include a 270 basis point negative impact from the wind-down of Canadian operations.
Looking ahead, the company maintained its previous forecast of a revenue decline, including retail sales and credit card revenues, of 4 to 6 percent versus fiscal 2022, including an approximately 250 basis point negative impact from the wind-down of Canadian operations and an approximately 130 basis point positive impact from the 53rd week.
