Nordstrom on Thursday said that first quarter net sales rose 5.8% to 3.5 billion, with total revenues of $3.6 billion ($92 million in credit card revenue), which included an increase of around 250 basis points from a calendar shift in its loyalty event. First quarter net earnings were $87 million, up from $63 million during the same period last year, according to a company press release
Same-store sales for the quarter rose 0.6% year over year, according to the release. That just missed analyst expectations for closer to 1%. Full-Price comp sales rose 0.7% while off-price comp sales rose 0.4% and e-commerce sales rose 18%.
Co-president Erik Nordstrom told analysts Thursday that the retailer's e-commerce profit margin is "about ... exactly [the] same" as its store profit margins, according to a transcript from Seeking Alpha.
Nordstrom shares got pummeled on Thursday, probably in part because of the sales miss, especially in established stores, which was such a contrast to Macy's surprise improvements from the previous day.
But comparing the two isn't quite fair, considering that Macy's hemorrhaged sales last year as it shuttered dozens of stores and is now reaching the end of that, while much smaller Nordstrom has held its brick-and-mortar footprint mostly steady. "We certainly don't anticipate large-scale store closing[s], all of our stores are profitable both in Rack and our full-line stores," Erik Nordstrom said Thursday. "So it's more understanding a market where we get the best engagement with customers and how that adds up to be [a] profitable relationship with [the] customer. So our focus is market share by local market and how we can grow that."
But Nordstrom may be too sanguine about its stores, according to comments from Cowen & Co. emailed to Retail Dive. "[W]e are monitoring the impact digital strength will have on [Nordstrom's] store base, and despite all stores being profitable, we think management may need to close more than the planned two or three per year."
Macy's has also been growing its off-price business from scratch for a couple of years, which is beginning to pay off, while Nordstrom's much more established Rack business of late has missed on merchandising. While analysts previously were worried that the off-price business, established in the 1970s but undergoing a rapid expansion in recent years, has been siphoning sales from the full-line operation, Rack stores in the first quarter missed expectations and were a "disappointment," executives said, although they also said they expect improvements.
Nordstrom has also launched a series of innovative concepts including its merchandise-free Local store, something that is likely to provide long-term benefit even as it drags down short-term results. "[W]e anticipate the retailer will continue to establish innovative strategies to further blend the channels, especially in-store plus mobile," Cowen analysts said.
That's the kind of thing that could be super-charged if the company could just escape the watchful eyes of Wall Street, but executives made clear at the beginning of their conference call that there would be no further comment on the going take-private process pursued by the Nordstrom family. That effort seemed over in March when the family was unable to secure financing after a special committee of the board had rejected the group's acquisition offer of $50 per share in cash as "inadequate."