By Ananya Mariam Rajesh
(Reuters) – Nordstrom beat Wall Street expectations for first-quarter revenue on Thursday but its reaffirmed annual forecasts have put investors in worry about demand at the department store chains which offer more discretionary items like apparel and footwear.
Shares of Nordstrom dropped nearly 4% in after-market trading.
However, the retailer has been trying to drive sales by addressing its merchandising issues and has made attempts to bring in more in-demand clothing at its namesake brand by offering classics along with minimalist pieces like oversized blazers, tailored pants, cropped jackets and dresses.
Sales at the company’s eponymous label recorded a 0.6% rise. Discount banner Rack’s sales rose 13.8% as Nordstrom pushed ahead with plans to open more of its stores in a bid to attract lower-income consumers.
Nordstrom has also been opening shelf spaces for brands like Birkenstock and Prada Beauty to drive customer traffic by enhancing the products its stores offer as these continue to be consumer favorites.
The company’s better-than-feared sales result is in contrast with peers Macy’s and Kohl’s, which are finding it difficult to attract customers and are also fixing merchandising issues at their stores.
“I mean overall, it’s not terrible. It looks better than what Kohl’s reported this morning,” Morningstar analyst David Swartz said.
Nordstrom’s first-quarter total revenue rose 4.8% to $3.34 billion, compared to LSEG expectations of a 0.6% rise to $3.20 billion. It posted quarterly loss of 24 cents, compared to estimates of 8-cent loss.
The department store operator’s gross profit decreased 225 basis points to 31.6%, weighed down by external theft in its transportation network and inventory cleanup in the supply chain network.
The company reaffirmed its 2024 comparable sales forecast of a 1% drop to a 2% rise and annual profit per share of $1.65 to $2.05.
“Even though the result seemingly look positive, they were up against weak figures over year and I think their guidance obviously hasn’t increased. So I think that’s really why we’re still seeing the stock come down,” said Jessica Ramirez, senior analyst at Jane Hali and Associates.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Maju Samuel)
