Nordstrom, Inc. reported that net sales for the third quarter ended November 2 increased 4.6 percent to $3.46 billion, compared to the Q3 period in fiscal 2023, while total company comparable sales increased 4.0 percent year-over-year (y/y). Gross merchandise value (GMV) increased 5.3 percent. Anniversary Sale timing, with one week shifting from the third quarter to the second quarter, reportedly had a negative impact of approximately 100 basis points on net sales compared with 2023.

The company beat Wall Street top-line forecasts. Seven analysts surveyed by Zacks expected $3.33 billion.

  • Nordstrom banner net sales increased 1.3 percent y/y and comparable sales increased 4.0 percent compared with the Q3 period in fiscal 2023. GMV increased 2.4 percent y/y. The timing shift of the Anniversary Sale had a negative impact on Nordstrom banner net sales of approximately 200 basis points compared with the third quarter of 2023.
  • Nordstrom Rack banner net sales increased 10.6 percent y/y with comparable sales increasing 3.9 percent y/y compared with the Q3 period in fiscal 2023.
  • Digital sales increased 6.4 percent compared with the Q3 period in fiscal 2023. The timing shift of the Anniversary Sale had a negative impact on company digital sales of approximately 100 basis points compared with the third quarter of 2023. Digital sales represented 34 percent of total sales during the third quarter.

“The continued sales growth across the company and strong gross margin in the third quarter indicate our team’s focus and efforts are working,” said CEO Erik Nordstrom.”Our customers have a lot of choices, and our results give us encouragement that we’re on the right path. Looking ahead, we’ll continue to improve our shopping experience as we strive to maintain the positive momentum we’ve worked towards all year.”

In the third quarter, women’s apparel and active reportedly posted double-digit growth, while shoes, men’s apparel and kids were up mid- to high-single-digits, versus Q3 2023. Growth in women’s apparel, shoes and men’s apparel reportedly accelerated sequentially from the second quarter.

Income Statement Summary

  • Gross margin amounted to 35.6 percent of net sales in Q3, increasing 60 basis points compared with 35.0 percent in the fiscal 2023 Q3 period, said to be primarily due to strong regular price sales.
  • Selling, general and administrative (SG&A) expenses, as a percentage of net sales, were 36.6 percent, a 25 basis points increase compared with 36.3 percent of net sales in the fiscal 2023 Q3 period, said to be primarily due to higher labor costs and a charge related to accelerated technology depreciation, partially offset by leverage on higher sales and improvements in variable costs across the business. Excluding the $14 million charge related to accelerated technology depreciation, adjusted SG&A expenses, as a percentage of net sales, were 36.2 percent of net sales.
  • EBIT was $83 million in the third quarter of 2024, compared with $102 million during the fiscal 2023 Q3 period. Adjusted EBIT of $97 million in the third quarter of 2024 excluded the accelerated technology depreciation. Adjusted EBIT of $77 million in the third quarter of 2023 excluded a favorable $25 million true-up related to the wind-down of Canadian operations.
  • Interest expense, net of $26 million, increased 8.8 percent y/y compared with $24 million during the fiscal 2023 Q3 period, said to be primarily due to lower interest income.
  • Income tax expense was $11 million, or 18.9 percent of pretax earnings, compared with income tax expense of $11 million, or 14.2 percent of pretax earnings, in the fiscal 2023 Q3 period. The increase in the rate in the third quarter of fiscal 2024 was driven primarily by tax benefits in the third quarter of fiscal 2023 associated with the wind-down of Canadian operations.
  • Nordstrom, Inc. reported third-quarter net earnings of $46 million, or earnings per diluted share (EPS) of 27 cents, and earnings before interest and taxes (EBIT) of $83 million. Excluding a charge related to accelerated technology depreciation, the company reported adjusted EBIT of $97 million and adjusted EPS of 33 cents per diluted share.

The bottom-line results reportedly topped Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research called for earnings of 23 cents per share.

Balance Sheet Summary

  • The company ended the third quarter with $1.2 billion in available liquidity, including $397 million in cash.
  • Ending inventory increased 5.9 percent compared with the fiscal 2023 Q3 period, versus a 4.6 percent increase in sales.

As previously announced, the Board of Directors declared a quarterly cash dividend of 19 cents per share, payable on December 18, 2024, to shareholders of record at the close of business on December 3, 2024.

“Our third quarter results demonstrate that our strategic focus on curating a compelling brand assortment is resonating with customers,” said Pete Nordstrom, president of Nordstrom, Inc. “Our actions throughout this year have led to this moment, and we feel well-positioned for a successful holiday season and look forward to helping our customers celebrate the moments that matter. I’m grateful to our dedicated team for consistently delivering the high level of service our customers have come to expect from Nordstrom.

Fiscal Year 2024 Outlook
Nordstrom, Inc. updated its financial outlook for fiscal 2024, which reflects the estimated accelerated technology depreciation impacts expected in the fourth quarter of fiscal 2024:

  • Revenue range, including retail sales and credit card revenues, of flat to 1.0 percent growth versus the 53-week fiscal 2023, which includes an approximately 135 basis point unfavorable impact from the 53rd week.
  • Comparable sales growth of 1.0 to 2.0 percent versus 52 weeks in fiscal 2023.
  • EBIT margin of 3.0 to 3.4 percent of sales.
  • Adjusted EBIT margin of 3.6 to 4.0 percent of sales.
  • Income tax rate of approximately 27 percent.
  • EPS of $1.40 to $1.70 per diluted share, excluding the impact of share repurchase activity, if any.
  • Adjusted EPS of $1.75 to $2.05, excluding the impact of share repurchase activity, if any.

Image courtesy Nordstrom, Inc.