Nov 21, 2023
Nordstrom Inc. beat Wall Street’s profit estimates on lower markdowns and better inventory management, but revenue fell short — highlighting the challenges the upscale department-store operator faces heading into Black Friday and the holiday season.
Sales at the company’s namesake banner stores fell 9.4% in the three months ended Oct. 28 and missed market expectations. At the off-price Nordstrom Rack stores, revenue dipped a more modest 1.8%, in line with estimates from analysts surveyed by Bloomberg.
The shares alternated between losses and gains in late New York trading. The stock has fallen 7.7% so far this year.
Investors will welcome the continued improvement at Rack stores, and it’s a sign the company’s bid to sell more high-end items on discount is starting to pay off. Despite the headway, Rack has still underperformed discount competitors such as TJX Cos. The off-price chain represents only about a third of total revenue, so progress is needed at the Nordstrom brand, where sales of $2.05 billion were short of the average estimate by roughly $100 million.
Earnings per share and gross margin came in ahead of estimates. The company cited “lower markdowns, increased inventory productivity and lower buying and occupancy costs.” Inventory fell nearly 9% versus a year earlier.
Still, Nordstrom Chief Executive Officer Erik Nordstrom struck a measured tone heading into the holiday season. “Given continued uncertainty and softening consumer spend, we’re remaining agile and focused on serving our customers,” he said in the statement.