Nordstrom Inc. managed to beat market watchers’ forecasts in the third quarter — largely thanks to the delay of its Anniversary Sale event.
For the three months ended Oct. 31, the department store posted earnings of 34 cents per share, compared with the prior year’s earnings of 81 cents per share. Revenues also declined nearly 16% to $3.09 billion. Still, it bested analysts’ predictions for a loss of 6 cents per share and revenues of $3.1 billion.
According to the company, the quarter included a positive impact of roughly 10 percentage points due to the shift of the Nordstrom Anniversary Sale, which was originally slated to occur in the Q2 period. The top-performing categories during the period were active, home, beauty and designer goods, as consumers engaged in more fitness activities, stayed indoors and appeared to seek retail therapy amid the pandemic.
“We also unlocked new ways to better serve customers on their terms with greater convenience and connection,” explained CEO Erik Nordstrom, who lauded the expansion of online order pickup services to almost 350 locations across both its namesake and off-price Rack banners. (Nordstrom noted it continues to invest in omnichannel capabilities to grow Nordstrom Rack, which it said represents the biggest source of new customers.)
The chain’s Anniversary Sale drove “record sell-through rates,” driven by Nordy Club loyalty customers, who accounted for approximately 80% of sales, the company said. In addition, e-commerce represented 60% of the event, with about a third of Nordstrom.com products fulfilled from stores to help enable faster delivery.
During the quarter, Nordstrom’s full-price business saw a 7% drop in sales. (Excluding the Anniversary Sale, sales fell in the mid-20s-percent range.) Nordstrom Rack, on the other hand, saw revenues tumble 32%. Overall digital sales, however, increased 37% to $1.6 billion and accounted for 54% of the retailer’s revenues.
“We are thankful for our team’s dedication to serving customers in new and differentiated ways,” president and chief brand officer Pete Nordstrom said in a statement. “By working with our vendor partners, we have made quick adjustments to ensure a great holiday offering for our customers. We are encouraged by the positive momentum and expect continued progress in the fourth quarter and into 2021.”
At the end of Q3, Nordstrom had $1.5 billion in liquidity, including $900 million in cash. It added that its third-quarter operating cash flow of $155 million exceeded expectations, enabling it to pay down an additional $300 million on its revolving line of credit.