As it looks to a future beyond the COVID-19 crisis, Nordstrom pointed to its pursuit of strategic omnichannel initiatives even as the company reported sales and earnings declines in the first quarter.
Net loss in the quarter was $521 million, or $3.33 per diluted share, versus net earnings of $37 million, or 23 cents per diluted share, in the period a year earlier. Adjusted for one-time charges, net loss was $2.23 per diluted share. The loss came in deeper than the Zacks Investment Research analyst consensus estimate of a $1.21 loss.
Net sales were $2.03 billion while total revenues were $2.12 billion versus sales of $3.35 billion and revenues of $3.44 billion, in the year-prior quarter.
Full-price store net sales decreased 36% and off-price store net sales decreased 45% in the coronavirus-impacted quarter year-over-year compared with the same period in fiscal 2019 due to temporary store closures. Total digital sales gained 5% in the quarter to reach $1.1 billion compared with the year-before period.
First quarter results reflected the company’s actions to strengthen its financial flexibility through inventory and overhead cost reductions during the COVID-19 crisis, and position the business for the long-term through an acceleration of its strategic initiatives.
Nordstrom said it continued its momentum from the second half of 2019 with positive sales growth in February and ongoing growth of its $5 billion e-commerce business. Nordstrom initiated temporary store closings on March 17 due to COVID-19, which had a material impact on financial results as stores made up two-thirds of total business in 2019. Loss per diluted share of $3.33 included charges of $1.10 associated with coronavirus effects.
“We successfully strengthened our financial flexibility by increasing liquidity, lowering inventory by more than 25% from last year and significantly reducing our cash burn by more than 40% from March into April,” said Erik Nordstrom, company CEO, “We’re entering the second quarter in a position of strength, adding to our confidence that we have sufficient liquidity to successfully execute our strategy in 2020 and over the longer term.”
Pete Nordstrom, president and chief brand officer, added, “It is clear we can seamlessly engage with customers through our Nordstrom and Nordstrom Rack brands across stores and online. We have a unique mix of assets, and the flexibility of our business model continues to serve us well. In 2019, our off-price and e-commerce businesses accounted for nearly 60% of sales. As we anticipate an acceleration of these longer-term customer trends, we’re taking proactive steps to move faster in executing our strategic plans.”
As previously announced, Nordstrom plans to close 16 full-line stores and three Jeffrey specialty boutiques in addition to restructuring its regional and corporate support organization to achieve greater agility.
As coronavirus-related movement and shopping restrictions relaxed, the company began reopening stores in early May with 40% of its store portfolio now open. Nordstrom continues to serve customers online and offer contactless curbside pickup services in most full-line stores. The company also is using fulfillment capabilities at full-line and Nordstrom Rack stores to leverage inventory in its markets and bring greater selection and faster delivery to customers.