Nordstrom is the latest retailer to adjust its yearly guidance down, despite performing well in the second quarter.
On Tuesday, the Seattle-based department store reported net Q2 earnings of $126 million, up from $80 million the same quarter last year. Net sales also increased 12% in the quarter to $3.99 billion, versus $3.57 billion in the same period last year.
During the quarter, Nordstrom banner net sales increased 14.7% to $2.77 billion, and net sales for Nordstrom Rack increased 6.3% to $1.22 billion. According to the retailer, the timing shift of its Anniversary Sale had a positive impact on Nordstrom banner net sales of approximately 400 basis points compared with the second quarter of 2021.
By category, men’s apparel had the strongest growth in Q2 versus last year, with shoes, women’s apparel and beauty also seeing double-digit gains, as customers updated their wardrobes and returned to occasions. Total Anniversary event sales increased 5%, including one day of the event that fell in the third quarter.
“We delivered solid results in the second quarter, with top-line growth, increased profitability and continued progress in our strategic initiatives,” Erik Nordstrom, CEO of Nordstrom Inc., said in a statement.
But while the company’s quarterly results were consistent with its previous outlook, the CEO noted that customer traffic and demand decelerated significantly beginning in late June, predominantly at Nordstrom Rack.
The softening of the market has led Nordstrom to adjust its plans and take action to navigate the market in the short term, including “aligning inventory and expenses” to recent trends. “We remain confident in our ability to deliver on our long-term strategic and financial goals,” Nordstrom added.
The company now expects revenue growth for fiscal 2022 to increase 5% to 7% versus its previous outlook of 6% to 8% growth.
Despite the retailer’s earnings beat in Q2, the news of Nordstrom’s revised yearly forecast sent its stock tumbling 13.58% in after-hours trading on Tuesday.
Nordstrom is the latest retailer to revise its outlook down this earnings season. Foot Locker, Ross Stores, Macy’s, Kohl’s and TJX Companies have all recently slashed their full-year forecast as high gas prices and spiking inflation impacted consumer buying habits.