Nordstrom Reports Second Quarter 2020 Earnings

  • Generated positive operating cash flow of more than $185 million in Q2; total liquidity of $1.3 billion
  • Improved merchandise margins and overhead cost reductions of nearly 20% drove earnings exceeding Company expectations
  • Sales in-line with Company expectations; reflecting temporary store closures for approximately 50% of days and Anniversary Sale shift from Q2 to Q3

Nordstrom, Inc. (NYSE: JWN) today reported second quarter results, which reflected cash flow and earnings exceeding the Company’s expectations through improved merchandise margins and significant overhead cost reductions. Loss per diluted share of $1.62 included charges of $0.08 associated with the impact of COVID-19.

For the second quarter ended August 1, 2020, sales were in-line with the Company’s expectations. Net sales decreased 53 percent from last year, reflecting temporary store closures for approximately 50 percent of days during the quarter due to COVID-19 in addition to an approximately 10-percentage point timing impact from the Nordstrom Anniversary Sale shifting from the second quarter to the third quarter.

“At the onset of the pandemic, we focused on protecting and enhancing liquidity, and we successfully executed on these plans,” said Erik Nordstrom, chief executive officer of Nordstrom, Inc. “Thanks to our team’s efforts during the second quarter, we further strengthened our balance sheet with liquidity of $1.3 billion and generated operating cash flow of more than $185 million. We are now pivoting to prioritize market share gains and profitable growth as we advance our strategies.”

“We’re confident that we can improve sales trends in the second half of the year and beyond,” said Pete Nordstrom, president and chief brand officer of Nordstrom, Inc. “Our inventories are current and in-line, and we’re focused on amplifying relevant categories, brands and trends to meet customers’ changing preferences.”

SECOND QUARTER 2020 SUMMARY
• Second quarter net loss of $255 million, which included after-tax COVID-19 related charges of $14 million primarily related to corporate asset impairments, decreased from net earnings of $141 million during the same period in fiscal 2019.
• Losses before interest and taxes of $370 million, which included pre-tax charges of $23 million related to COVID-19, decreased from earnings before interest and taxes (“EBIT”) of $216 million during the same period in fiscal 2019 primarily due to lower sales volume from temporary store closures in response to COVID-19.
• In Full-Price, net sales decreased 58 percent. Excluding the Anniversary Sale event shift impact, Full-Price sales decreased in the mid-forties percent range. Off-Price net sales decreased 43 percent compared with the same period in fiscal 2019. Top performing merchandise categories included home, kidswear, accessories, beauty and active in both Full-Price and Off-Price.
• Total company digital sales decreased 5 percent. Excluding the Anniversary Sale event shift impact, digital sales increased approximately 20 percent in the second quarter and in the mid-teens range on a year-to-date basis. The Company’s e-commerce business continued to experience significant growth in new Nordstrom customers of more than 50 percent.
• Gross profit, as a percentage of net sales, was 21 percent, decreasing from 35 percent for the same period in fiscal 2019 due to planned markdowns and deleverage from lower sales volume and reflected sequential improvement in merchandise margin trends.
• Ending inventory decreased 24 percent from last year. Excluding the Anniversary Sale event shift impact, the decrease in inventory was in-line with the decrease in sales.
• Selling, general and administrative (“SG&A”) expenses, as a percentage of net sales, was 47 percent compared with 31 percent for the same period in fiscal 2019. Excluding charges related to COVID-19, total SG&A decreased approximately 33 percent from last year, primarily due to lower sales volume in addition to reduced overhead costs of nearly 20 percent.
• The income tax benefit of $166 million, or 40 percent of pretax loss, reflects a higher projected benefit rate for fiscal 2020 due to the carryback of net operating losses as permitted under the CARES Act.
details at: https://investor.nordstrom.com/static-files/025f307e-7d1f-4527-a0cb-6fda6cd71460

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