Nordstrom (NYSE: JWN) Posts Mixed Results for the Third Quarter

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Nordstrom (NYSE: JWN) stock fell 7.31% (As on Nov 26, 10:52:40 AM UTC-4, Source: Google Finance) after the company posted mixed results for the third quarter of FY 21 as labor costs ate into profits and sales and its Nordstrom Rack business struggled to return to pre-pandemic levels. The department store operator reaffirmed its full-year revenue outlook, even as rivals Macy’s and Kohl’s boosted forecasts. Net income rose to $64 million, from $53 million, a year earlier. At Nordstrom’s namesake department store brand, revenue rose 11% from a year ago and climbed 3% on a two-year basis. More customers came to its stores, and shoppers spent more per purchase. Nordstrom cited home goods, active apparel, designer brands and beauty as areas of strength. At Nordstrom Rack, an off-price division that competes with TJ Maxx and Macy’s Backstage, sales were up 35% from 2020 but fell 8% from 2019. The company is taking steps to improve Rack’s performance, including investing in raising brand awareness, better managing inventory levels and balancing prices to put them in closer alignment with shoppers’ expectations.

Further, Digital sales fell 12% year over year and rose 20% on a two-year basis, representing 40% of the business. Nordstrom noted that last year its annual Anniversary Sale, which takes place primarily online but also in stores, was moved entirely into the third quarter, while this year it only fell during one week of the quarter. Nordstrom said its inventory levels grew 13% compared with the same period in 2019, due to the department store operator pulling forward some orders of goods to try to mitigate ongoing supply chain bottlenecks.

JWN in the third quarter of FY 21 has reported the adjusted earnings per share of 39 cents, missing the analysts’ estimates for the adjusted earnings per share of 52 cents. The company had reported the adjusted revenue growth of 35.9 percent to $3.53 billion in the third quarter of FY 21, beating the analysts’ estimates for revenue of $3.52 billion.

The company expects annual revenue, including credit card sales, to grow more than 35% from last year. Analysts had been looking for a 36% increase, according to Refinitiv. The company also expects its EBIT margin to represent around 3.0% to 3.5% of its sales.

On the other hand, for the Christmas season, the company is excited about the plans to use the integrated network of stores and digital platforms to showcase holiday dressing, decor and gift offerings, and provide festive experiences and convenient services that make shopping easy and enjoyable for the customers

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