Nordstrom: 4th Consecutive Quarter of Growth

In Industry News, Reports, What's New by Lauren ParkerLeave a Comment

nordstrom-2-logo-primaryNordstrom, Inc. reported Q2 earnings and once again, the news was good.

Meeting expectations, total net sales increased 9.2%, marking the fourth consecutive quarter of high-single-digit growth. Q2 net earnings were $211 million and earnings before interest and taxes were $377 million, or 10.5% of net sales.

The Company’s strategic growth investments, including its entry into Canada, the acquisition of Trunk Club and launch of Nordstromrack.com, drove over one-third of the total sales growth in the second quarter.

Total comp sales increased 4.9%, compared with the same period last year, reflecting consistent trends over the past year. In addition, the Anniversary Sale, which is the Company’s largest event of the year, achieved Company expectations.

  • Nordstrom comparable sales, which consist of the full-line and Nordstrom.com businesses, increased 4.8 percent. Top-performing merchandise categories included Cosmetics and Women’s Apparel. The strength in Women’s Apparel was led by coats, dresses and younger customer-focused departments.
  •  Full-line net sales of $2.1 billion increased 1.1% compared with the same period last year. Comparable sales increased 0.8%, reflecting ongoing improvement in sales trends. The Southwest and Southeast were the top-performing geographic regions.
    • Nordstrom.com net sales increased 20%, primarily driven by continued expansion of merchandise selection.
  • Net sales in the off-price business increased 16% compared with the same period last year.
    • Nordstrom Rack net sales of $0.9 billion increased 13%, compared with the same period in fiscal 2014, representing 26 consecutive quarters of double-digit growth. Nordstrom Rack comparable sales increased 1.7%, on top of last year’s increase of 4%, consistent with its two-year stacked trend.
    • Nordstromrack.com/HauteLook net sales increased 50% for the second consecutive quarter.
  • Gross profit of $1.3 billion, or 35.3% of net sales, decreased 6 basis points compared with the same period in fiscal 2014.
  • Ending inventory increase of 11%, compared with the same period last year, was consistent with expectations and reflected planned growth initiatives related to Trunk Club and Canada. This increase was relatively in-line with the net sales increase of 9.2%.
  • The Nordstrom Rewards loyalty program continued to contribute to overall results, with members shopping three times more frequently and spending four times more on average than non-members. The Company opened approximately 350,000 new accounts in the second quarter. With 4.5 million active members, sales from members increased 10 percent in the second quarter and represented 44% of sales.

EXPANSION UPDATE

During the first half of the year, the Company opened two full-line stores and 11 Nordstrom Rack stores. In the third quarter, the Company plans to open three full-line stores (Vancouver, BC, Canada; Minneapolis, Minnesota; and Milwaukee, Wisconsin), relocate a full-line store in Los Angeles, California and open 16 Nordstrom Rack stores.

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