Nordstrom (JWN -1.03%), the high-end department store chain known for luxury and accessibility, released its third-quarter earnings for 2024 on Nov. 26. The company reported adjusted earnings per share (EPS) of $0.33, outperforming the analyst estimate of $0.22. Revenue reached $3.347 billion, edging above the anticipated $3.344 billion, marking a 4.6% year-over-year increase.
Despite rising costs, the company maintained a steady gross profit margin. The quarter was overall positive, with noted gains in specific product categories, though concerns about managing operational expenses persist.
| Metric | Q3 2024 | Q3 Estimate | Q3 2023 | Change (YOY) |
|---|---|---|---|---|
| Earnings Per Share (adjusted) | $0.33 | $0.22 | $0.25 | +32.0% |
| Revenue (in billions) | $3.347 | $3.344 | $3.200 | +4.6% |
| Gross Profit Margin | 35.6% | N/A | 35.0% | +0.6 pp |
Source: Nordstrom. Analyst estimates for the quarter provided by FactSet.
Understanding Nordstrom's Business
Founded in 1901, Nordstrom has evolved into a leading fashion retailer specializing in apparel, shoes, cosmetics, and accessories. With a robust network of retail locations across the U.S., it operates under two primary banners: Nordstrom and Nordstrom Rack. Nordstrom offers premium and emerging brands, focusing on quality and exclusive merchandise, while Nordstrom Rack provides discount options, leveraging inventory efficiently to attract budget-conscious consumers. Recent business focuses include expanding the Nordstrom Rack banner, optimizing its omni-channel presence, and growing the digital sales footprint.
Success for Nordstrom hinges on its omni-channel strategy, integrating online and physical shopping to create a seamless customer experience. Another critical factor is its ability to leverage its brand and product offerings to differentiate itself in a crowded retail market. Expanding its physical footprint—particularly Nordstrom Rack—gives the company a broader reach, helping to acquire new customers and enhance brand visibility.
NYSE: JWN
Key Data Points
Quarterly Highlights
Nordstrom's Q3 performance was marked by several notable developments. The company successfully increased total net sales by 4.6% compared to the previous year. This growth was driven by an impressive 10.6% increase in Nordstrom Rack's net sales and a 3.9% rise in comparable sales. The digital sales channel also contributed, growing by 6.4%, with digital now representing 34% of total sales. This growth highlights the importance of the company’s omni-channel strategy and digital platform integration.
Gross profit margin expanded 60 basis points to 35.6%, despite rising labor costs and technology investments reflected in a slightly increased SG&A (Selling, General and Administrative) expense at 36.6% of net sales. The company incurred charges related to accelerated technology depreciation, but these were partially offset by strategic inventory management and cost controls.
Nordstrom continued to refine its omni-channel integration, opening new stores and enhancing its digital capabilities, which collectively support its yearly sales figures and competitiveness. Additionally, it launched new marketing initiatives, strengthened its brand offerings, and strategically adjusted inventory levels in anticipation of holiday shopping trends.
While net earnings saw a decline of $21 million to $46 million against the backdrop of cost pressures and strategic investments, Nordstrom's underlying business remained resilient. The retailer did not declare or adjust dividends during the quarter, signaling a focus on reinvestment and growth amid economic fluctuations.
Forward-Looking Statements
Looking ahead, Nordstrom projects stable growth, forecasting annual revenue growth ranging from flat to 1%, with comparable sales anticipated to increase by 1% to 2%. The EPS guidance for the year stands at $1.40 to $1.70, with adjusted EPS estimates excluding share repurchase impacts ranging from $1.75 to $2.05. This guidance reflects cautious optimism, balancing economic uncertainties with strategic initiatives.
Investors should monitor Nordstrom’s ongoing efforts to enhance its omni-channel capabilities and the expansion of Nordstrom Rack locations. Management remains focused on maximizing operational efficiency, investing in technology, and leveraging customer loyalty programs to drive engagement and revenue growth in the coming quarters. Moving forward, strategic expansion and effective cost management will be crucial determinants of Nordstrom's success amidst a competitive retail environment.
