On November 21, 2023, Nordstrom Inc (JWN, Financial) released its 8-K filing, revealing a third-quarter net earnings of $67 million, translating to earnings per diluted share (EPS) of $0.41. Adjusted for a favorable true-up related to the wind-down of Canadian operations, the adjusted EPS was $0.25. The company's total revenue for the quarter was $3.3 billion, a 6.8% decrease compared to the same period in fiscal 2022.
Financial Performance Overview
Nordstrom's third-quarter performance was marked by a decline in net sales and gross merchandise value (GMV), with a 6.8% and 7.1% decrease respectively. The wind-down of Canadian operations negatively impacted net sales by 270 basis points. However, the timing shift of the Anniversary Sale positively affected net sales by approximately 200 basis points. Excluding these factors, net sales would have been down around 6%. Digital sales decreased by 11.3%, representing 34% of total sales during the quarter.
Margin and Expense Management
The company's gross profit as a percentage of net sales improved by 180 basis points to 35.0%, primarily due to lower markdowns and increased inventory productivity. Selling, general, and administrative (SG&A) expenses as a percentage of net sales slightly decreased by 5 basis points to 36.3%. The company ended the quarter with a decrease in ending inventory by 8.8% compared to a 6.8% decrease in sales, indicating improved inventory management.
Store Updates and Future Outlook
Nordstrom Inc (JWN, Financial) has actively managed its store portfolio, opening or relocating 20 stores and announcing plans for additional openings. The company updated its fiscal 2023 outlook, expecting a revenue decline of 4.0 to 6.0 percent versus fiscal 2022, including the impact of the Canadian operations wind-down and the 53rd week. The adjusted EBIT margin is projected to be between 3.8 to 4.1 percent of sales, with an adjusted EPS of $1.90 to $2.10.
Balance Sheet and Cash Flow Highlights
As of October 28, 2023, Nordstrom Inc (JWN, Financial) reported cash and cash equivalents of $375 million. The balance sheet showed a total asset value of $9.013 billion. Net cash provided by operating activities for the nine months ended October 28, 2023, was $107 million, with capital expenditures of $375 million during the same period.
Management Commentary
CEO Erik Nordstrom commented on the quarter's results, stating,
In the third quarter we continued to make progress against our priorities, and we’re especially pleased with the resulting improvements in gross margin and earnings."President Pete Nordstrom highlighted the company's favorable inventory position and assortment heading into the holiday season.
Investor Considerations
While Nordstrom Inc (JWN, Financial) faces market challenges, including a softening consumer spend, the company's efforts in improving gross margin and inventory management are notable. The reaffirmed revenue outlook and narrowed EPS guidance provide a clearer picture for investors. As the holiday season approaches, Nordstrom's strategic positioning and store updates could play a crucial role in its performance.
For detailed financial tables and further information, readers are encouraged to view the full 8-K filing.
Explore the complete 8-K earnings release (here) from Nordstrom Inc for further details.
