It was a mixed second quarter for Nordstrom, as the department and off-price retailer’s earnings beat its expectations while net sales declined.
Second quarter net earnings were $141 million compared with $162 million during the same period in fiscal 2018. Earnings per diluted share came in at $0.90 for the second quarter ended August 3, 2019.
Total company net sales decreased 5.1% in the second quarter to $3.77 billion compared with $3.98 billion in net sales in the previous second quarter. In full-price stores, net sales decreased 6.5% compared with the same period in fiscal 2018. Off-price store division net sales decreased 1.9%. Total company digital sales grew 4% and represented 30% of the business.
The company noted that sales were around the low end of its expected range. This reflected a challenging start to the quarter as well as softer performance for its Anniversary Sale and off-price business. However, Nordstrom said it saw positive outcomes from the execution of its loyalty and digital marketing programs. The company said it is taking advantage of its strong inventory position to increase depth in key items and improve in-stock levels. The off-price business is amplifying its marketing efforts and making strategic inventory investments to fuel growth in the second half of the year.
“We delivered strong bottom-line results, demonstrating our inventory and expense discipline. We exited the quarter in a favorable inventory position and made important strides in productivity,” said Erik Nordstrom, co-president, Nordstrom. “We’re focused on driving our top-line, and while this can take time, we are confident in our ability to manage through cycles. We remain encouraged by our key initiatives, including our local market strategy, and are making good progress on key areas of focus that we believe will collectively drive increased value creation for our shareholders.”
Nordstrom will continue to expand its local market strategy to New York City, its largest market for online sales, with the opening of its flagship store on October 24 and two Nordstrom Local neighborhood hubs in September.