Nordstrom Reports 3rd Quarter 2022 Earnings

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reported 3^rd quarter revenues of $3.4 billion compared to 3.5 billion at the end of the third quarter of 2021. Loss per share was $0.13 and adjusted earnings of $0.20. Company expects to achieve fiscal 2022 revenue and adjusted earnings outlook.

In the third quarter net sales decreased 2.9% versus the same period in fiscal 2021.amd gross merchandise value (GMV) decreased 2.5%. Notably, the Anniversary sale timing one week shifted from the third quarter to the second quarter which had a negative impact of about 200 basis points compared with 2021. The company indicated that Nordstrom full-line stores dropped 2.9% while the Rack stores dropped 1.9%.

Management indicated that young customers cut their shopping dramatically in September and October and only in the last two weeks management has seen a pick-up in sales to this age group. It matches a report by Urban Outfitters who profits dropped 58% in the third quarter of 2022 as inflation hits younger shoppers. Evan Clark of WWD reported that the outlook is still good if the economy does not fall off a cliff.

The company announced plans to open or relocate stores. Nordstrom Rack will open 8 stores in the Spring of 2023, and 8 stores in the Fall of 2023. In addition, a single store was announced for the Spring of 2024. Units in operation now are 94 Nordstrom US; 6 Nordstrom Canada;1 ASOS/Nordstrom (new this quarter).242 Nordstrom Rack (2 new additions this quarter) and 7 Nordstrom Rack Canada. It was indicated that Nordstrom Rack carry about 90% of merchandise brands in the Nordstrom brand stores.

The company reaffirmed the following financial expectations for fiscal 2022:

Revenue growth including retail sales and credit card revenues 5 to 7 percent.

EBIT Margin as a percent to sales 4.1 to 4.4 percent

Adjusted EBIT margin 4.3 to 4.7 percent

Income tax rate of approximately 27 percent

EPS, excluding the impact of share repurchase activity, if any, of $2.13 to $2.43

Adjusted EPS, excluding the impact of share repurchases of $2.13 to $2.60

Leverage ratio below 2.9 times by year end.

The company also announced that they will not give guidance of he coming year due to the uncertainty of the economic environment.

POSTSCRIPT: Management is confident about the future. It will have spent $200 million on unwanted merchandise and has pointed to the fact that the Nordstrom board of directors has declared a quarterly dividend of $0.19 payable on December 14, 2022 reaffirming the board’s confidence in the future of Nordstrom