Despite declining sales volumes across all channels, Nordstrom Inc. went into the black for the third quarter ended Oct. 28, thanks to improved execution.
The Seattle-based retailer on Tuesday reported third-quarter net earnings of $67 million, or earnings per diluted share of 41 cents, compared to a net loss of $20 million, or 13 cents, in the year-ago period. Earnings before interest and taxes were $102 million, compared to $3 million in the year-ago period.
Net sales decreased 6.8 percent versus the same period in fiscal 2022. Gross merchandise value decreased 7.1 percent. Third-quarter net sales include a 270 basis point negative impact from the wind-down of Canadian operations.
The timing of Nordstrom’s Anniversary Sale, with one week shifting from the second quarter to the third quarter, had a positive impact of approximately 200 basis points on net sales compared with 2022. Excluding the impacts of the Canadian wind-down, which occurred this year, and Anniversary Sale timing shift, net sales would have been down approximately 6 percent.
“In the third quarter we continued to make progress against our priorities, and we’re especially pleased with the resulting improvements in gross margin and earnings,” Erik Nordstrom, chief executive officer of Nordstrom, said in a statement. “Given continued uncertainty and softening consumer spend, we’re remaining agile and focused on serving our customers.”
“Thanks to solid execution by our merchants, we’re heading into holiday in a favorable inventory position across both banners,” Pete Nordstrom, president and chief brand officer of Nordstrom, said in a statement. “We have a strong and relevant assortment of brands and products we know our customers respond to, and we’re excited to help them celebrate the moments that matter this holiday season.”
During the quarter, Nordstrom banner net sales decreased 9.4 percent and GMV decreased 9.8 percent. Net sales for Nordstrom Rack decreased 1.8 percent. During the third quarter, active grew by double digits, and beauty and accessories were up by low-single digits, versus 2022.
Digital sales decreased 11.3 percent compared with the same period in fiscal 2022.
Gross profit as a percentage of net sales of 35 percent increased 180 basis points compared with the same period in fiscal 2022, primarily due to lower markdowns, increased inventory productivity and lower buying and occupancy costs, partially offset by deleverage on lower sales.
In forecasting for the year, the company maintained its previous forecast of a revenue decline, including retail sales and credit card revenues, of 4 to 6 percent 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 53rd week.
However, the company did raise its forecast for EBIT margin to 1.8 to 2.1 percent of sales versus the previous forecast of 1.5 to 2 percent of sales.
The forecast for adjusted EBIT margin (excluding charges related to the wind-down of Canadian operations) was also changed to 3.8 to 4.1 percent of sales versus the 3.7 to 4.2 percent previously forecast.