Nordstrom, Inc. reported third-quarter internet earnings of $64 million or $0.39 per diluted share, with earnings earlier than curiosity and taxes (“EBIT”) of $127 million.
For the third quarter ended October 30, 2021, internet gross sales elevated 18 p.c versus the identical interval in fiscal 2020 and decreased 1 p.c versus the identical interval in fiscal 2019. The timing of this 12 months’s Anniversary Sale, with roughly one week falling into the third quarter of 2021, had a optimistic influence of roughly 200 foundation factors on internet gross sales in contrast with fiscal 2019.
Throughout the quarter, Nordstrom banner internet gross sales elevated 3 p.c versus the third quarter of fiscal 2019, which included an roughly 300 foundation level optimistic influence from Anniversary Sale timing, whereas internet gross sales for Nordstrom Rack decreased 8 p.c versus the third quarter of fiscal 2019. Gross sales within the residence, lively, designer and wonder classes had the strongest development in contrast with the third quarter of 2019. Geographically, Nordstrom’s comparable-store gross sales within the Southern areas, together with Southern California, grew 8 p.c versus 2019 and outperformed the Northern areas. Comparable gross sales in suburban space shops continued to be stronger than city shops within the third quarter, with each enhancing sequentially over the second quarter.
“We’ve lengthy benefited from a dedication to customer support, new and compelling merchandise, progressive model partnerships and interconnected digital and bodily belongings. Nevertheless, we have to transfer sooner to capitalize on these strengths and profitably develop our market share. We’re taking motion to enhance efficiency at Nordstrom Rack, together with optimizing stock ranges, higher balancing value factors and growing model consciousness. Work can also be underway to enhance merchandise margin throughout the Firm and guarantee now we have the visibility and adaptability we have to serve our clients seamlessly, regardless of world provide chain challenges,” mentioned Erik Nordstrom, chief government officer of Nordstrom, Inc. “Within the third quarter, we made continued progress towards our strategic and monetary objectives, pushed by sturdy digital development, the built-in capabilities enabled by our Market Technique and elevated internet gross sales in our Nordstrom banner shops, however we’re centered on accelerating our transformation and enhancing outcomes.”
Nordstrom continues to broaden buyer selection counts as a part of its evolving merchandising technique. Different partnership fashions past conventional wholesale preparations grew to almost 8 p.c as a share of whole gross sales, and the Firm’s not too long ago introduced partnerships with Fanatics and ASOS will present a broader assortment in new and current classes for patrons, with out a corresponding enhance in owned stock for the Firm.
“Taking classes realized from this 12 months’s Anniversary Sale, the workforce has mixed the artwork of merchandising with data-driven insights to place the fitting assortment in the fitting place on the proper time,” mentioned Pete Nordstrom, president and chief model officer of Nordstrom, Inc. “For the vacation season, we’re enthusiastic about our plans to make use of our built-in community of shops and digital platforms to showcase vacation dressing, decor and present choices, and supply festive experiences and handy providers that make purchasing straightforward and gratifying for our clients.”
As Nordstrom continues to strengthen its monetary place, the Firm stays on monitor to scale back its leverage ratio to roughly thrice, and be ready to return money to shareholders, by the tip of 2021.
THIRD-QUARTER 2021 SUMMARY
Whole Firm internet gross sales elevated 18 p.c in contrast with the identical interval in fiscal 2020, throughout which the whole Anniversary Sale quickly shifted to the third quarter. Web gross sales decreased 1 p.c relative to the identical interval in fiscal 2019. The timing of this 12 months’s Anniversary Sale, with roughly one week falling into the third quarter of 2021, had a optimistic influence on internet gross sales of roughly 200 foundation factors in contrast with the third quarter of 2019.
For the Nordstrom banner, internet gross sales elevated 11 p.c and three p.c in contrast with the identical durations in fiscal 2020 and monetary 2019, respectively. The timing of this 12 months’s Anniversary Sale had a optimistic influence on Nordstrom banner internet gross sales of roughly 300 foundation factors in contrast with the third quarter of 2019. For the Nordstrom Rack banner, internet gross sales elevated 35 p.c and decreased 8 p.c in contrast with the identical durations in fiscal 2020 and monetary 2019, respectively.
Digital gross sales decreased 12 p.c in contrast with the identical interval in fiscal 2020, throughout which the Anniversary Sale quickly shifted to the third quarter of that 12 months, and elevated 20 p.c in contrast with the identical interval in fiscal 2019. The timing of this 12 months’s Anniversary Sale had a optimistic influence on Firm’s digital gross sales of roughly 400 foundation factors in contrast with the third quarter of 2019. Digital gross sales represented 40 p.c of whole gross sales in the course of the quarter.
Gross revenue, as a proportion of internet gross sales, of 35 p.c elevated 230 foundation factors in contrast with the identical interval in fiscal 2020 primarily as a result of fewer markdowns and leverage from greater internet gross sales. Gross revenue, as a proportion of internet gross sales, elevated 80 foundation factors in contrast with the identical interval in fiscal 2019, pushed by elevated leverage on decrease shopping for and occupancy prices in addition to greater merchandise margins.
Ending stock elevated 13 p.c in contrast with the identical interval in fiscal 2019, versus a 1 p.c lower in gross sales. The change in stock ranges versus 2019 was because of the Firm’s actions to tug ahead receipts to help early vacation gross sales and mitigate persevering with provide chain backlogs.
Promoting, basic and administrative (“SG&A”) bills, as a proportion of internet gross sales, of 34 p.c elevated 230 foundation factors in contrast with the identical interval in fiscal 2020 primarily because of labour price strain, partially offset by leverage on greater gross sales. SG&A bills, as a proportion of internet gross sales, elevated 260 foundation factors in contrast with the identical interval in fiscal 2019 because of success and labour price pressures, partially offset by the continued profit from resetting the price construction in 2020.
EBIT was $127 million within the third quarter of 2021, in contrast with $106 million throughout the identical interval in fiscal 2020 primarily as a result of greater gross sales quantity and improved merchandise margins, partially offset by labour price strain. EBIT was $66 million decrease than the third quarter of fiscal 2019 as a result of success and labour price pressures, partially offset by the continued profit from resetting the price construction in 2020.
Curiosity expense, internet, of $36 million decreased from $48 million throughout the identical interval in fiscal 2020 because of the redemptions of the 8.75% secured notes in the course of the first quarter of fiscal 2021 and the 4.0% unsecured notes in the course of the second quarter of fiscal 2021.
Revenue tax expense was $27 million, or 30 p.c of pretax earnings, in contrast with $5 million, or 8 p.c of pretax earnings, in the identical interval in fiscal 2020. Final 12 months’s earnings tax included advantages related to the Coronavirus Assist, Reduction, and Financial Safety Act (“CARES Act”).
Third-quarter internet earnings of $64 million elevated from internet earnings of $53 million throughout the identical interval in fiscal 2020, which included a tax profit related to the CARES Act of $19 million.
The Firm ended the third quarter with $867 million in accessible liquidity, together with $267 million in money.
THE FISCAL YEAR 2021 OUTLOOK
The Firm is reaffirming the next monetary expectations for fiscal 2021:
Income, together with retail gross sales and bank card revenues, is predicted to develop greater than 35 p.c versus fiscal 2020
EBIT margin is predicted to be roughly 3.0 to three.5 p.c of gross sales
The earnings tax fee is predicted to be roughly 27 p.c
The leverage ratio is predicted to be roughly 3x by year-end
CONFERENCE CALL INFORMATION
The Firm’s senior administration will host a convention name to supply a enterprise replace and to debate third quarter 2021 monetary outcomes and monetary 2021 outlook at 4:45 p.m. Japanese Customary Time at this time. To hearken to the stay name on-line and think about the audio system’ ready remarks and the convention name slides, go to the Investor Relations part of the Firm’s company web site at investor.nordstrom.com. An archived webcast with the audio system’ ready remarks and the convention name slides shall be accessible within the Quarterly Outcomes part for one 12 months. events may dial 201-689-8354. A phone replay shall be accessible starting roughly three hours after the conclusion of the decision by dialing 877-660-6853 or 201-612-7415 and coming into Convention ID 13724527, till the shut of enterprise on November 30, 2021.
