For the primary quarter ended Could 1, 2021, internet gross sales elevated 44% to $2.921 billion, from $2.02 billion in the identical 2020 interval, and decreased 13% from the identical interval in fiscal 2019, representing a sequential enchancment of 720 foundation factors in comparison with the fourth quarter of fiscal 2020.
Nordstrom model internet gross sales elevated 37% to $1.85 billion, from $1.35 billion in the identical interval in fiscal 2020, and decreased 13% versus the identical 2019 interval. Internet gross sales for Nordstrom Rack elevated 59% to $1.06 billion, from $669 million within the fiscal 2020 first quarter, and decreased 13% in contrast with the fiscal 2019 first quarter.
The corporate stated gross sales traits mirrored broad-based enchancment throughout Nordstrom and Nordstrom Rack, in shops and on-line, and throughout areas and merchandise classes. In the course of the quarter, Nordstrom expanded the rollout of its market technique to its high 20 markets, which account for about 75 p.c of gross sales.
“We’re happy with our leads to the primary quarter,” stated Erik Nordstrom, CEO of Nordstrom Inc., on a convention name with Wall Avenue analysts. “With our distinctive product providing, we’re assured in our skill to drive market share and drive worthwhile progress as shoppers resume actions similar to going again to work and touring.”
“We’re inspired by gross sales traits each in our shops and our digital enterprise, supported by an enhancing shopper surroundings and powerful execution,” he stated. “Looking forward to summer season, we’re well-positioned to proceed to capitalize on pent-up demand, and we’re additional strengthening our place as we execute on our technique to win in our most vital markets, broaden the attain of Nordstrom Rack and enhance our digital velocity.
“Our market technique brings an unmatched stage of comfort and connection to prospects who make up 75% of our gross sales,” he stated, including that it provides shoppers higher entry to merchandise, no matter how they select to buy. The market technique was rolled out to Atlanta, Houston, Detroit and Minneapolis through the quarter.
The Seattle-based retailer stated the Covid-19 pandemic impacted many elements of its enterprise, from assortments and the extra informal apparel it started providing originally of the well being disaster, to its upcoming Anniversary Sale, its largest occasion, which supplies Nordstrom card holders early entry to financial savings on fall merchandise. President and chief model officer Pete Nordstrom stated that six months in the past when it the retailer was planning the sale, it wasn’t clear when the pandemic would subside, so the retailer didn’t lean into trend as a lot as earlier years.
Nonetheless, the Anniversary Sale can be well-timed to profit from post-pandemic exercise, Erik Nodstrom stated. “We’re constructing a digital catalog with product suggestions and including in-store occasions. Anniversary decisions are up by double digits. We’re additionally working with distributors to speed up product receipts. We’re very excited to capitalize on market share alternatives as buyer demand recovers.
The large distinction between the 2019 Anniversary Sale and the upcoming one is that it’s extra of a digital occasion, Nordstrom stated. “Final yr it took an enormous step towards digital. We added the wishlist and that exceeded our expectations. The assume there can be far more digital engagement throughout 2021. Shops may also have much more visitors than we had final yr.”
“Our southern areas from east to west carried out 7 to 10 share factors higher than northern areas,” he stated. “They’ve opened up [sooner], some from mandates, some from prospects getting out extra. We anticipate our northern shops will get to the identical spot.”
Digital gross sales elevated 23% within the first quarter in contrast with the identical interval in fiscal 2020, and rose 28% in contrast with the identical interval in fiscal 2019. Digital gross sales represented practically half of complete gross sales through the quarter. Gross sales performed by means of a digital platform similar to Nordstrom’s web sites or cell apps could possibly be self-guided by the client or facilitated by a salesman utilizing a digital styling or promoting software, similar to Nordstrom Trunk Membership or Model Board.
The retailer noticed additional integration of digital gross sales and shops with digital order pick-up out there in Nordstrom shops, Nordstrom Rack shops or Nordstrom Native service hubs. Digital gross sales additionally embrace a reserve for estimated returns.
Gross sales benefited from enhancing traits in classes similar to occasion-based attire, purses, sun shades and swimwear, whereas dwelling, energetic, designer and wonder classes continued to carry out properly.
The retailer expanded its assortments in each Nordstrom and Nordstrom Rack, whereas additionally lowering its stock overage from the top of the fourth quarter of fiscal 2020 sooner than anticipated. Nordstrom is balancing stock ranges with gross sales whereas managing receipt flows to mitigate potential provide chain disruptions because the yr progresses.
“There was elevated buyer selection in youngsters dwelling and energetic, which supported a 37% enhance in gross sales over the 2019 first quarter,” Erik Nordstrom stated. “We proceed to reinforce the digital expertise. We’ll offer extra decisions – 1.5 million selection depend over the subsequent a number of years, pushed by an expanded drop-ship assortment. It’s allowed us to drive robust gross sales progress in our digital enterprise.”
Pete Nordstrom added, “We’re seeing it play out within the dwelling class the place we’ve expanded fairly considerably, and drop-ship been a extremely vital a part of that. It creates extra flexibility with our open-to-buy, too. Once you don’t personal the stock, you’re sharing the economics with the seller.”
Gross revenue, as a share of internet gross sales, of 31%, elevated roughly 2,000 foundation factors in contrast with the identical interval in fiscal 2020, primarily because of decrease markdowns and leverage from greater internet gross sales quantity. Gross revenue, as a share of internet gross sales, decreased 260 foundation factors in contrast with the identical interval in fiscal 2019 on account of deleverage on decrease gross sales and decrease merchandise margins, partially offset by everlasting reductions in shopping for and occupancy prices.
Promoting, normal and administrative bills, as a share of internet gross sales, of 37%, decreased roughly 1,900 foundation factors in contrast with the identical interval in fiscal 2020 on account of $250 million in costs related to the impression of Covid-19 in 2020, leverage on greater gross sales and the continued good thing about everlasting reductions in overhead bills of roughly 15%. SG&A bills, as a share of internet gross sales, elevated 280 foundation factors in contrast with the identical interval in fiscal 2019 on account of Covid-19 -related labor and freight price pressures.
Covid-19 demand impacts are clearly moderating, creating continued pressures. In 2020, Nordstrom incurred pandemic-related costs that diminished internet earnings by $173 or $1.10 per diluted share. The fees diminished earnings earlier than curiosity and revenue taxes by $280, together with roughly $250 in promoting, normal and administrative bills and $30 in price of gross sales and associated shopping for and occupancy prices.
As beforehand introduced, Nordstrom additional improved its monetary place in April by redeeming $600 million of 8.75% secured notes and issuing lower-coupon unsecured notes due in 2024 and 2031. Because of these transactions, the Firm’s bond portfolio is as soon as once more solely unsecured. These transactions will scale back annualized curiosity expense by roughly $30 million, starting within the second quarter of fiscal 2021.