Nordstrom Registers Less-Than-Expected Earnings In Q3 Financial Report

Nordstrom Registers Less-Than-Expected Earnings In Q3 Financial Report

Nordstrom announced its earnings this week, which failed to beat analysts’ expectations as labour costs impacted the profits and sales. Moreover, Nordstrom Rack business found it hard to bounce back to the pre-pandemic levels.

In the three-month period ended Oct. 30, the company reported the earnings per share at 39 cents against the 56 cents expected by Wall Street. 

The apparel and footwear retailer attracted revenue, including credit card sales of $3.64 billion, topping expectations for $3.55 billion. In the same quarter last year, the company had posted revenue that included credit card sales of $3.90 billion. 

In the reporting quarter, credit card revenue came in at $103 million, up from $87 million on a year-over-year basis. 

The third-quarter net income stood at $64 million, up from a net income of $53 million during the same period last year, including tax benefits associated with the CARES Act of $19 million.

EBIT for the third quarter stood at $127 million compared with $106 million, reported in the year-ago period. The rise came in due to “higher sales volume and improved merchandise margins, partially offset by labour cost pressure. “

“EBIT was $66 million lower than the third quarter of fiscal 2019 due to fulfilment and labour cost pressures, partially offset by the continued benefit from resetting the cost structure in 2020,” said the company in a statement. 

During the reporting quarter, Nordstrom banner net sales rose to 3 percent on a two-year basis, while net sales for Nordstrom Rack decreased 8 percent on a two-year basis and increased 18 percent on a year-over-year basis. Home, active, designer and beauty categories attracted the most customers, compared with the third quarter of 2019. 

Digital sales saw a fall of 12% year over year, whereas climbed 20% on a two-year basis, representing 40% of the sales. 

Ending inventory rose 13 percent on a two-year basis, versus a 1 percent decrease in sales. The change in inventory levels on a two-year basis came in “due to the Company’s actions to pull forward receipts to support early holiday sales and mitigate continuing supply chain backlogs.”

For the full year, Nordstrom sees its revenue, including credit card sales, to increase more than 35% from last year, below the analysts’ expectations for a 36% increase, according to Refinitiv. In addition, the company expected the EBIT margin to be approximately 3.0 to 3.5 percent of sales.

Nordstrom Registers Less-Than-Expected Earnings In Q3 Financial Report

The impact of the announcement could be observed on the dashboard of Quantale as the social engagement for the stock amongst the users of Twitter and Reddit rose approximately 70% on Tuesday late evening, when the company released its earnings report. It fell about 94% on a subsequent day. 

On Wednesday, the trading volume increased by approximately 400%. Nordstrom ended its intraday at a closing price of $26.66 apiece, down 29.03% or $9.25 per share from its previous day’s close of 31.93 apiece.