Ticker Symbol: JWN
Shares of Nordstrom, the luxury retailer, are up 4% in morning trading after the company posted first quarter sales that beat estimates. The company also raised its revenue outlook for the 2023 fiscal year. Nordstrom distinguishes itself from other large retailers such as Macy’s and Kohl’s in the U.S. by targeting more luxury-oriented shoppers.
The company’s upbeat numbers stand in stark contrast to the discount retailers such as Target, who have recently cut back their annual forecasts as inflation eats into margins. Nordstrom’s board of directors also authorized a new $500 million share repurchase program, highlighting the company’s confidence in its outlook.
For the first quarter, the company posted revenue of $3.6 billion, ahead of the average analyst estimate of $3.3 billion. Nordstrom Brand, the company’s higher-end segment, did most of the heavy lifting in the beat, reporting net sales of $2.3 billion versus the $2 billion expected. This was a growth of 23.5% year over year, and the first quarter where sales exceeded the pre-pandemic levels.
Nordstrom Rack, the discount segment, met analysts estimates. The company also reported earnings before interest and taxes (EBIT) of $73 billion, versus Wall Street estimates of $20 billion. The company’s new guidance for the fiscal year calls for revenue to be up 6% to 8%, where it previously saw revenue up 5% to 7%. The company also expects EBIT margins to come in around 6%, and sees adjusted earnings per share of $3.20 to $3.50.
The company said its digital sales were flat year over year, with e-commerce representing 39% of total sales versus 46% in 2021. Nordstrom’s urban center stores performed particularly well during the quarter as offices reopen in areas such as New York City. Collectively, urban stores are now performing at pre-pandemic levels. Crucially, the company has not seen inflation impact consumer behavior and demand in its high-end segment of retail products. Nordstrom’s customers tend to have a higher income profile relative to some of its competitors.
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