Nordstrom, citing continued improving trends across categories and geographies as well as headwinds in the supply chain and rising costs, reported net earnings of $80mn for the second quarter, compared to a loss of $255mn in the year-ago period. Based on top- and bottom-line improvements in the last two quarters, the company upped its forecasts for the year. Revenue growth is seen at 35%, versus 25% previously forecast. EBIT margin is seen at 3 - 3.5% of sales, versus approximately 3% previously forecast. EBIT, in the quarter ended July 31 came to $151mn versus the year-ago loss of $370mn. Net sales last quarter increased 101% to $3.57bn, from $1.79bn in the same period in fiscal 2020, and decreased 6% from the same period in fiscal 2019, representing a sequential improvement of approximately 7% relative to the first quarter of fiscal 2021.
The timing shift of the annual Anniversary Sale, with roughly one week falling into the third quarter of 2021, had a negative impact of approximately 2% on net sales compared with fiscal 2019, though the company said the sale had a strong performance this year. Total Anniversary sales increased 1% compared with 2019, including the final week of the event, which fell in the third quarter. According to the company, traffic and sales trends during the Anniversary Sale were strong across both digital and stores as customers responded positively to expanded selection, better in-stock rates on top-selling items and enhanced capabilities including convenient pickup options at Nordstrom and Nordstrom Rack stores.
Nordstrom mentioned that that there is ‘uncertainty in the external environment’ including continued disruptions in product flow in the supply chain and ‘headwinds’ with rising freight costs and labour wage increases, though the company is working to ensure having the ‘right teams and proper levels of service’ in place.
In the last quarter core categories of shoes, apparel and accessories experienced the largest improvement in sales trends relative to the first quarter. In addition, sales in active, home and designer categories continued to grow versus 2019.
Nordstrom’s ambitious ‘closer-to-you’ agenda involves evolving its market strategy to link stores and services to speed deliveries and add conveniences to shoppers, as well as bolstering online offerings and adding lower-price merchandise at many of the Rack off-price stores.
The company said it remains on track to reduce its leverage ratio to approximately three times by yearend. Interest expenses of $40mn decreased from $51mn during the same period in fiscal 2020 primarily as a result of the redemption of the 8.75% secured notes during the first quarter of fiscal 2021. The company has $2.85bn in long-term debt.
At the Nordstrom brand, Q2 net sales increased 127% compared with the same period in 2020, and decreased 5% compared with the same period in fiscal 2019. For Nordstrom Rack, Q2 net sales increased 61% compared with the same period in fiscal 2020, and decreased 8% compared with the same period in fiscal 2019. Digital sales increased 30% compared with the same period in fiscal 2020 and increased 24% compared with the same period in fiscal 2019. Digital sales represented 40% of total sales during the quarter. Gross profit