Nordstrom, Inc. reported a third-quarter net loss of $20 million, or 13 cents a share, for the quarter ended October 29, 2022. Excluding a supply chain technology and related asset impairment charge, the company reported adjusted earnings per diluted share of 20 cents.

For the third quarter, net sales decreased 2.9 percent versus the same period in fiscal 2021 and gross merchandise value (“GMV”) decreased 2.5 percent. Anniversary Sale timing, with one week shifting from the third quarter to the second quarter, had a negative impact of approximately 200 basis points on net sales compared with 2021. During the quarter, Nordstrom banner net sales decreased 3.4 percent, which included a negative impact of approximately 300 basis points from Anniversary Sale timing, and GMV decreased 2.9 percent. Net sales for Nordstrom Rack decreased 1.9 percent.

“We delivered both topline and bottom-line results in line with our expectations in the third quarter while enhancing our strategic capabilities,” said Erik Nordstrom, CEO, Nordstrom, Inc. “When customer demand decelerated in late June, we took action to align inventory and expenses with the changing trends, which has prepared us to navigate the current macroeconomic environment. This quarter our teams continued to advance our Closer to You strategy and supply chain capabilities, as we focus on initiatives to drive profitable growth and achieve our long-term strategic and financial goals.”

In the third quarter, core categories, including men’s and women’s apparel, shoes and designer, had the strongest growth versus 2021, as customers continued to shop for occasions, travel, work and holidays.

“We are right-sizing our inventory levels and mix, and are on track to end 2022 in a healthy and current position,” said Pete Nordstrom, president and chief brand officer, Nordstrom, Inc. “Customers continue to respond to newness and fashion in our offering, and we are focused on remaining agile to respond to their changing needs. This holiday season we are delivering a fresh, relevant assortment, which supports our goal of being the go-to destination for gifting, and preparing for the moments that matter most to customers.”

As previously announced on November 16, 2022, the board of directors declared a quarterly cash dividend of $0.19 per share to be paid to shareholders of record at the close of business on November 29, 2022, payable on December 14, 2022. Year to date, the company repurchased 2.3 million shares of its common stock for $53 million under its existing $500 million share repurchase program. A total capacity of $447 million remains available under this share repurchase authorization.

Third Quarter 2022 Summary

  • Total company net sales decreased 2.9 percent and GMV decreased 2.5 percent compared with the same period in fiscal 2021. The timing shift of the retailer’s Anniversary Sale, with one day falling into the third quarter of 2022 versus roughly one week in 2021, had a negative impact on net sales of approximately 200 basis points compared with the third quarter of 2021.
  • For the Nordstrom banner, net sales decreased 3.4 percent, and GMV decreased 2.9 percent compared with the same period in fiscal 2021. The timing shift of its Anniversary Sale had a negative impact on Nordstrom banner net sales of approximately 300 basis points compared with the third quarter of 2021.
  • For the Nordstrom Rack banner, net sales decreased 1.9 percent compared with the same period in fiscal 2021.
  • Digital sales decreased 16.4 percent compared with the same period in fiscal 2021. The timing shift of its Anniversary Sale had a negative impact on company digital sales of approximately 300 basis points compared with the third quarter of 2021. Reducing store fulfillment for Nordstrom Rack digital orders during the third quarter and sunsetting Trunk Club earlier in fiscal 2022 negatively impacted digital sales by approximately 700 basis points. Reducing Nordstrom Rack store fulfillment accounted for the majority of the impact. Digital sales represented 34 percent of total sales during the quarter.
  • Gross profit, as a percentage of net sales, of 33.2 percent decreased 190 basis points compared with the same period in fiscal 2021 primarily due to higher markdown rates. The company incurred approximately $100 million in incremental markdowns in the third quarter, out of the approximately $200 million expected in the second half of fiscal 2022.
  • Ending inventory increased 0.6 percent compared with the same period in fiscal 2021, versus a 2.9 percent decrease in sales.
  • SG&A expenses, as a percentage of net sales, of 36.4 percent increased 200 basis points compared with the same period in fiscal 2021 primarily due to a supply chain technology and related asset impairment charge, partially offset by fulfillment expense efficiencies. Excluding the $70 million impairment charge, adjusted SG&A expenses, as a percentage of net sales, were 34.3 percent.
  • EBIT was $3 million in the third quarter of 2022, compared with $127 million during the same period in fiscal 2021, primarily due to higher markdowns and a supply chain technology and related asset impairment charge, partially offset by fulfillment expense efficiencies. Adjusted EBIT of $73 million for the third quarter of 2022 excluded an impairment charge associated with supply chain technology and related assets.
  • Interest expense, net of $32 million, decreased from $36 million during the same period in fiscal 2021.
  • Income tax benefit was $9 million, or 30.6 percent of the pretax loss, compared with an income tax expense of $27 million, or 29.9 percent of pretax earnings, in the same period in fiscal 2021.
  • The company ended the third quarter with $993 million in available liquidity, including $293 million in cash.

Photo courtesy Nordstrom