US retailer Nordstrom posts net earnings of $137 million in Q2 FY23

Nordstrom, a leading US-based fashion retailer, has reported second quarter net earnings of $137 million, or earnings per diluted share (EPS) of $0.84, and earnings before interest and taxes (EBIT) of $192 million in the second quarter (Q2) of fiscal 2023 (FY23).

For the second quarter ended July 29, 2023, net sales decreased 8.3 per cent versus the same period in fiscal 2022, compared to a decrease of 11.6 per cent in the first quarter, reflecting sequential improvement in sales at both Nordstrom and Nordstrom Rack. Gross merchandise value (GMV) decreased 8.5 per cent. Second quarter net sales include a 275 basis point negative impact from the wind-down of Canadian operations. Anniversary Sale timing, with one week shifting from the second quarter to the third quarter, had a negative impact of approximately 200 basis points on net sales compared with 2022. Excluding the impacts of the Canadian wind-down and anniversary sale timing shift, net sales would have been down approximately 4 per cent. During the quarter, Nordstrom banner net sales decreased 10.1 percent and GMV decreased 10.4 per cent. Net sales for Nordstrom Rack decreased 4.1 per cent.

Digital sales decreased 12.9 per cent compared with the same period in fiscal 2022. Collectively, eliminating store fulfillment for Nordstrom Rack digital orders during the third quarter of fiscal 2022 and sunsetting Trunk Club during the second quarter of fiscal 2022 negatively impacted second quarter digital sales by approximately 500 basis points. The timing shift of the anniversary sale had a negative impact on company digital sales of approximately 300 basis points compared with the second quarter of 2022. Digital sales represented 36 per cent of total sales during the quarter.

In the second quarter of fiscal 2023, gross profit, as a percentage of net sales, of 35.0 per cent decreased 20 basis points compared with the same period in fiscal 2022 primarily due to deleverage on lower sales, partially offset by lower buying and occupancy costs.

"We've worked hard to improve our operating model, and our solid results reflect the continued progress we made against our top priorities to improve Nordstrom Rack performance, increase inventory productivity and deliver efficiencies through supply chain optimisation," said Erik Nordstrom, chief executive officer of Nordstrom, Inc. "These 2023 priorities improve the way we operate and drive profitability in the near term, and better position us to succeed and deliver value to our shareholders in the long-term. Looking ahead, we remain confident in our ability to deliver on these priorities, all while keeping the customer at the centre of everything we do."

In the second quarter, active and beauty grew by low single-digits versus 2022. Kids' apparel and men's apparel performed better than average for the quarter, the company said in a press release.

"Our annual anniversary sale was a successful event, especially among our most loyal customers. We were pleased by the strong sell-through of new merchandise from the best brands, both in stores and online," said Pete Nordstrom, president and chief brand officer of Nordstrom, Inc. "In the second quarter, we were also encouraged by sequential improvement in sales trends at both Nordstrom and Rack. We remain focused on managing inventory with greater discipline, improving mix and productivity, and thank our teams for their hard work in bringing it all to life for our customers."

For fiscal 2023, the company expects revenue decline, including retail sales and credit card revenues, of 4.0 to 6.0 per cent versus fiscal 2022, including an approximately 250 basis point negative impact from the wind-down of Canadian operations and an approximately 130 basis point positive impact from the 53^rd week.