Nordström (NYSE: JWN) fell sharply after the release of second quarter results.
Nordstrom banner net sales increased 14.7% and Nordstrom Rack sales increased 6.3%. The company noted that traffic and customer demand had slowed significantly from late June, mainly at Nordstrom Shelf.
Second-quarter digital sales grew 6.3% to account for 38% of total sales.
Top categories: Men’s apparel and footwear saw the strongest growth in the quarter. Women’s apparel and beauty also saw double-digit growth as customers refreshed their wardrobes and reconnected with occasions.
Gross margin increased by 65 basis points to 35.2% of sales, mainly due to leverage on purchasing and occupancy costs, partially offset by higher shrinkage rates.
The department store operator’s inventory position at the end of the quarter was up 9.9%.
Nordstrom (JWN) ended the quarter with $1.3 billion in liquidity, including $494 million in cash and all of the $800 million available on its revolving line of credit.
Looking ahead, Nordstrom (JWN) expects revenue growth of +5% to +7% versus previous guidance of +6% to +8%. EPS of $2.30 to $2.60 is expected against a prior view of $3.20 to $3.50 and a consensus of $3.08. For the back half, JWN is aggressively scaling inventory while investing in supply chain and merchandising capabilities that will pay off in 2023 and beyond.
Update from the CEO: “We are adjusting our plans and taking actions to navigate this near-term dynamic, including aligning inventory and spending with recent trends, and we remain confident in our ability to achieve our strategic goals and long-term financials.
Nordstrom (JWN) shares slipped 11.81% in after-hours trading at $20.45.