Nordstrom reported a net loss of $116mn for the quarter ended May 1, compared to a loss of $521mn in the year-ago quarter. Nordstrom’s net loss included an after-tax debt refinancing charge of $64mn, and the year-ago net loss included after-tax charges of $173mn related to COVID-19. Sales last quarter rose 44% to $2.92bn, versus $2.03bn a year ago, and decreased 13% from the same period in fiscal 2019. Top-line trends increased sequentially for the third quarter in a row with improvements in both Nordstrom and Nordstrom Rack supported by recovery in stores. Nordstrom stores were temporarily closed for about half of the 2020 first quarter due to COVID-19. Nordstrom continues to see strength in categories that led during COVID-19, particularly active and home where sales are up 58% compared to 2019 levels. Customers are responding well to designer brands, bringing classifications like sunglasses, swim, shorts and dresses as well as recovery categories like denim, dress wear, makeup and handbags.
Nordstrom’s market strategy, involving integrating services and providing greater merchandise offerings across channels and the retailer’s two banners, Nordstrom and Nordstrom Rack, expanded to 10 new markets including Atlanta, Houston, Detroit and Minneapolis over the last three months. Nordstrom continues to scale the enhanced capabilities launched in 2020 like the expansion of order pickup and ship-to-store to all Nordstrom Rack stores with order pickup more than doubling compared to the first quarter of 2019. In addition, nearly one-third of next-day order volume for nordstrom.com in their top 20 markets was picked up at Rack stores.
Nordstrom also said that more than 50% of the retailer’s salespeople are utilizing remote styling tools to assist customers, and that the business was further buoyed by livestream shopping events featuring some of Nordstrom’s best brands. The company continues to enhance their digital capabilities to improve the customer experience across the shopping journey. One of the key opportunities is to offer customers more choices with plans to increase choice count to approximately 1.5 million over the next several years. Choice count increased appr. 20% versus 2019, primarily driven by an expanded drop-ship assortment in both core categories and in demand categories like home, active and kids.
In the next three to five years, 50% of Nordstrom’s assortment should be developed through wholesale arrangements; 20% of the assortment will be private label, and remainder will be through ‘alternative partnerships and drop ship is a part of that.’ For the Nordstrom brand, net sales increased 37% compared with the same period in fiscal 2020, but decreased 13% compared with the same period in fiscal 2019. For the Nordstrom Rack brand, net sales increased 59% compared with the same period in fiscal 2020, but fell 13% compared with the same period in fiscal 2019. Digital sales increased 23% compared to 2020 and increased 28% compared with the same period in fiscal 2019. Digital sales represented 46% of total sales during Q1/2021. Gross profit (as a percentage of net sales) of 31% increased about 20% compared with Q1/2020, primarily due to lower markdowns and leverage from higher net sales volume. Gross profit decreased 2.6% compared with Q1/2019 as a result of deleverage on lower sales and lower merchandise margins, partially offset by permanent reductions in buying and occupancy costs.