Nordstrom turned in better-than-expected numbers for the second quarter and made a plausible case that its turnaround strategy might be gaining traction.
On Wednesday, the Seattle-based retailer, which has struggled with a tough retail environment and a series of self-inflicted management mistakes, beat Wall Street expectations for the quarter ending August 3rd.
Earnings came in at $141 million while earnings-per-share were $0.90. That was around 18 percent higher than Wall Street analysts had predicted — a welcome change of pace as the company prepares to launch its biggest-ever store project, a $500 million store in Manhattan, on October 24.
Those quarterly earnings were down 12.9 percent from the same quarter in 2018, however. Total sales for the second-quarter also declined by 5.1 percent year-over-year, to $3.78 billion, and were well below Wall Street’s forecasts.
While the company’s bottom-line exceeded expectations, sales were around the low end of its expected range. This reflected a challenging start to the quarter as well as softer performance for the Anniversary Sale and off-price business. However, Nordstrom saw positive outcomes from the execution of its loyalty and digital marketing programs. The company is taking advantage of its strong inventory position to increase depth in key items and improve in-stock levels, applying learnings from its Anniversary Sale. The off-price business is amplifying its marketing efforts and making strategic inventory investments to fuel growth in the second half of the year.
“We delivered strong bottom-line results, demonstrating our inventory and expense discipline. We exited the quarter in a favorable inventory position and made important strides in productivity,” said Erik Nordstrom, co-president of Nordstrom, Inc. “We’re focused on driving our top-line, and while this can take time, we are confident in our ability to manage through cycles. We remain encouraged by our key initiatives, including our local market strategy, and are making good progress on key areas of focus that we believe will collectively drive increased value creation for our shareholders.”