Shares of Nordstrom Inc. are down in after-hours trading after the company posted earnings that fell short of expectations, but the retailer reiterated its outlook for the full year.
For the three months ended May 1, the department store logged a net loss of $166 million, or a loss of $1.05 per share, compared with the prior year’s net loss of $521 million, or loss of $3.33 per share. Wall Street had predicted a loss of 57 cents per share. Revenues, on the other hand, improved 42% to $3 billion, just besting analysts’ estimates of $2.9 billion.
Still, CEO Erik Nordstrom said in a statement that the company was “encouraged” by sales trends both in stores and online, attributed to an “improving consumer environment and strong execution.”
According to the chain, stores were temporarily closed for approximately half of the quarter. Sales at the Nordstrom brand climbed 37% compared with the same period in 2020 and fell 13% versus 2019. Nordstrom Rack similarly saw a 59% hike in sales from the year-ago period but a 13% drop when stacked against two years ago.
A bright spot in the report was the performance of e-commerce: Digital sales increased 23% year over year and 28% from the 2019 fiscal year. The channel represented 46% of revenues during the first quarter.
Nordstrom also reported that it has seen growth in categories such as occasion-based apparel, handbags, sunglasses and swimwear, while home, active, designer and beauty remained strong.
“Looking ahead to summer, we are well positioned to continue to capitalize on pent-up demand and are further strengthening our position as we execute on our strategy to win in our most important markets, broaden the reach of Nordstrom Rack and increase our digital velocity,” added the chief executive.
While some of its department store rivals like Macy’s Inc. and Kohl’s Corp. recently raised their full-year forecasts following solid earnings beats, Nordstrom reinstated its guidance for the 2021 fiscal year: It predicted a gain of more than 25% in revenues, with its EBIT (or earnings before interest and taxes) margin projected to be roughly 3% of sales.
The outlook was announced at its annual investor presentation in February, when the company unveiled a new business strategy, dubbed Closer to You, that employs key learnings from COVID-19, including a heightened focus on digital and off-price.
“We are continuing to serve our long-time and new customers on their terms, with highly relevant and current product, more choices and better service, allowing us to deliver on our commitment to get ‘closer to you,'” added president and chief brand officer Pete Nordstrom. “With the efforts of our incredible employees and close partnership with our vendors, we have aligned inventories with current sales trends and are energized by the momentum we’re seeing in the business and the plans we have for a strong Anniversary Sale.”
At the end of the first quarter, Nordstrom had $977 million in available liquidity, including $377 million in cash. Its annual Anniversary Sale is set to take place in July.