US department store chain Nordstrom's net sales up 18.7% in Q1 2022

During the quarter, Nordstrom banner net sales increased 23.5 per cent and GMV increased 24.8 per cent. Net sales for Nordstrom Rack increased 10.3 per cent and continued to show sequential improvement towards pre-pandemic sales levels, the company said in its first quarter 2022 earnings report.

Digital sales were flat compared with the same period in fiscal 2021 as customers increasingly chose to shop in-store. Digital sales represented 39 per cent of total sales during the quarter.

Gross profit, as a percentage of net sales, of 32.8 per cent increased 190 basis points compared with the same period in fiscal 2021 due to leverage on buying and occupancy costs and improved merchandise margins from favourable pricing impacts and lower markdown rates.

Ending inventory increased 23.7 per cent compared with the same period in fiscal 2021, versus an 18.7 per cent increase in sales.

Selling, general and administrative expenses, as a percentage of net sales, of 33.6 per cent decreased 320 basis points compared with the same period in fiscal 2021 primarily due to leverage on higher sales.

Additionally, first quarter EPS was negatively impacted by $0.05 as a result of discrete tax expenses, primarily related to stock-based compensation, which increased the quarterly effective tax rate by 19.3 per cent of pre-tax earnings. The company continues to expect a full-year income tax rate of approximately 27 per cent.

"Our focus on serving the customer through our interconnected model with Nordstrom and Nordstrom Rack, a scaled digital platform and a strong store fleet positioned us to capitalise on demand from customers who shopped for long-awaited occasions and refreshed their closets," said Erik Nordstrom, chief executive officer of Nordstrom, Inc. "In the first quarter, we drove strong topline growth with broad-based improvement across core categories and geographies. Importantly, we made progress on our strategic initiatives and continue to focus on increasing profitability on the path to achieving our financial targets."

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. Improvements were broad-based across regions, with urban stores having the strongest growth. Merchandise margins improved because of favourable pricing impacts and lower markdown rates.

"Customers remain at the centre of everything we do, and we continue to provide them with expanded and relevant choices and the differentiated service they expect from us, delivering on our commitment to get 'closer to you'," said Pete Nordstrom, president and chief brand officer of Nordstrom, Inc. "We're pleased with the momentum we're seeing in the business and excited about our plans for the upcoming Anniversary Sale. Looking ahead, we are committed to driving additional merchandise margin improvement and increasing supply chain productivity, to deliver incremental profitability while continuing to elevate the customer experience."

As previously announced on May 18, 2022, the board of directors declared a quarterly cash dividend of $0.19 per share to be paid to shareholders of record at the close of business on May 31, 2022, payable on June 15, 2022. The board of directors also authorised a new $500 million share repurchase programme on May 18, 2022.

Fibre2Fashion News Desk (KD)