Nordstrom (JWN) reports Q2 2022 results

Shoppers leave a Nordstrom store on May 26, 2021 in Chicago, Illinois.

Scott Olson | Getty Images News | Getty Images

Nordström Tuesday cut its financial forecast for the full year as the department store chain faces a glut of inventory and slowing demand.

The retailer’s lower forecast came even as it reported fiscal second-quarter earnings and sales ahead of analysts’ estimates. Its shares were down 13% in extended trading. Early in the day, Macy’s too cut its outlook for the full yearsaying he expects deteriorating consumer spending on discretionary items like clothing will force him to use heavy markdowns to pull items off shelves.

“Customer traffic and demand slowed significantly beginning in late June, primarily at Nordstrom Rack,” Nordstrom CEO Erik Nordstrom said in a press release. “We are adjusting our plans and taking steps to navigate this near-term dynamic, including aligning inventory and spending with recent trends.”

Nordstrom is now seeing its annual sales, including credit card revenue, increase 5% to 7%, compared to a previous range forecasting a 6% to 8% increase. He calls for adjusted earnings per share to be in the range of $2.30 to $2.60, down from an earlier forecast of $3.20 to $3.50.

Here’s how Nordstrom fared in its fiscal second quarter compared to what analysts expected, based on Refinitiv estimates:

  • Earnings per share: 81 cents adjusted vs. 80 cents expected
  • Revenue: $4.1 billion vs. $3.97 billion expected

Nordstrom’s net income in the three months ended July 30 rose to $126 million, or 77 cents per share, from $80 million, or 49 cents per share, a year earlier.

Sales increased from $3.66 billion to $4.10 billion. Within this framework, digital sales increased by 6.3%, representing 38% of total revenue.

Nordstrom said its menswear division saw the strongest growth over 2021, with footwear, womenswear and beauty posting double-digit gains as shoppers searched for outfits for special occasions.

Nordstrom banner net sales increased 14.7%, driven in part by the timing of the company’s annual anniversary sale. At Nordstrom Rack, the company’s off-price banner, net sales rose 6.3% from a year earlier, but were down from pre-pandemic levels.

Company-wide inventory levels increased nearly 10% from the same period last year.

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