4 Things to Know After Nordstrom’s Strong Quarter – from ‘Sunsetting’ Trunk Club to Launching Allbirds in 14 Stores

Nordstrom raised its full-year outlook after reporting first-quarter sales ahead of expectations on Tuesday, citing a return to occasion-based dressing.

The Seattle-based department store reported on Tuesday that its total company net sales increased 18.7% to $3.5 billion in Q1 of 2022, compared with the same period in fiscal 2021. Net income for the three-month period was $20 million, or 13 cents a share, compared with a net loss of $166 million a year earlier.

In the first quarter, core categories including men’s and women’s apparel, shoes and designer had the strongest growth against 2021 as customers refreshed their wardrobes for occasions such as social events, travel and return to office, according to CEO Erik Nordstrom. “Improvements were broad-based across regions, with urban stores having the strongest growth,” he added on the company’s earnings call on Tuesday. “Merchandise margins improved as a result of favorable pricing impacts and lower markdown rates.”

Looking ahead, Nordstrom is updating its outlook to reflect first quarter performance. The retailer now expects revenue growth, including retail sales and credit card revenues, of 6% to 8% versus fiscal 2021.

See here four more things to know about Nordstrom’s strong quarter.

Nordstrom is sunsetting Trunk Club

The retailer said on Tuesday that it is “sunsetting” its Trunk Club business, the personal styling service it acquired in 2014 for $350 million. This comes after Nordstrom closed all six of Trunk Club’s brick-and-mortar locations in March 2020. The business was then absorbed into its department stores and repositioned to bolster Nordstrom’s styling services. Now, the retailer said it is “redirecting its resources to the services that its customers value most.”

“I want to be clear,” CEO Erik Nordstrom said on Tuesday’s earnings call. “This move reflects our belief and commitment to styling, and we are dedicated to growing and investing in these services. We have a range of styling services from low-touch outfit inspiration through our digital channels to a high-touch and personalized relationship with a stylist, all of which achieved high customer satisfaction scores. We are directing our investment towards these programs to ensure that we are well positioned to serve customer needs and drive growth.”

According to Nordstrom, customers spend 7 times more and report higher levels of satisfaction when engaging with a stylist, either in-store or online. “While we still see the highest number of customers engaged with our in-person styling, we are seeing rapid growth within our digital services,” Nordstrom added. “We continue to leverage data science and advance our digital tools, including virtual Style Boards, to empower our stylists with highly relevant recommendations for their customers.”

Allbirds will roll out in 14 stores and online

President and chief brand officer Pete Nordstrom said on Tuesday’s call that the company continues to evolve its merchandising model to improve customers’ choices while increasing relevance. Known internally as “alternative partnership models,” the segment represented 12% of Nordstrom banner GMV this quarter as it aims to continue to provide newness and selection by partnering with brands in new ways, beyond the legacy wholesale model.

As such, Pete announced on the call that in the second quarter, Nordstom will launch Allbirds across its stores and online. “Beginning June 1, we will offer men’s and women’s styles in select stores, with plans to launch on Nordstrom.com later this summer,” Pete said.

Styles like the popular Wool Runner, Tree Runner, Tree Lounger, Tree Breezer, Tree Flyer and Tree Dasher, will now be available at 14 select stores next month. Some of the stores receiving the line include its NYC Flagship, Downtown Seattle, Palo Alto, Century City, Houston Galleria, and Tysons Corner Center.

Later this year, Allbirds will expand their selection, which will be available to shop on Nordstrom.com, at Center Stage in NYC and in more Nordstrom stores.

This isn’t the first time the two brands have teamed up. In 2018, Nordstrom launched “Pop-In@Nordstrom Welcomes Allbirds” for the brand’s first national and international in-store retail partnership.

An expanded partnership with Asos

Pete also highlighted on the call that Nordstrom has expanded its Asos partnership, opening a new store at the Grove in Los Angeles last Friday, specifically designed to engage young adult customers. “This is the first Asos co-branded physical retail location and our first representation of a full Asos in-person shopping experience,” Pete said. “We had a great customer response to the launch, and we are excited for the opportunity ahead with this partnership.”

The Asos x Nordstrom shop at The Grove features a two-story, 20,000-square-foot space with experiential elements and relevant brands. This follows the roll out of the brand in 10 Nordstrom stores including Nordstrom NYC, Nordstrom Men’s Store NYC, Nordstrom Michigan Avenue, Nordstrom Aventura, and Nordstrom Scottsdale Fashion Square.

This comes as the retailer bolstered its relationship with Asos in July 2021 when it acquired a minority stake in the Topshop, Topman, Miss Selfridge and HIIT brands less than six months after Asos acquired the labels.

A return to occasion dressing

On the company’s earnings call, Pete Nordstrom said he was “excited to see customers shopping for events and updating their closets this quarter.”

Pete added that men’s apparel was Nordstrom’s strongest category this quarter. More broadly, both men’s and women’s apparel had double-digit growth over last year and sales that exceeded pre-pandemic levels. Strength in men’s and women’s apparel was driven especially by suiting and dresses, Nordstrom added.

“While we always strive for balance across all relevant categories, it is true that event and occasion-based categories are important to our customers and represent a significant portion of our business,” Pete added.

But, he did mention apparel demand goes beyond occasions, though. “We also saw robust demand for wardrobe refreshes, especially for the spring and summer seasons,” said Pete Nordstrom. “Shoes had a strong double-digit growth with increased demand across formal, casual and athletic styles. And our designer offering across all categories continued to perform very well, also posting strong double-digit growth and sales significantly above pre-pandemic levels.”

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