Executives at high-end fashion retailer Nordstrom said they’re optimistic about the second half of 2021 as consumers continue to shop for new clothing to wear to events and social occasions, though sales remain below levels seen in 2019.
One of the things giving the retailer confidence “is a little more predictability and visibility in terms of what’s happening,” CEO Erik Nordstrom told analysts and investors on a conference call. At the beginning of the pandemic, he said, there were so many unknowns and “everyone’s lives changed so much,” which created opportunities in certain parts of the business while contracting others.
“We’ve moved into a time where there’s a little more stability and people are out there quite a bit more, so we’ve seen improvements in our business,” Nordstrom said.
Chief Financial Officer Anne Bramman said many of the company’s sales in the second quarter came from consumers looking to refresh their wardrobes through purchases of shoes, apparel and accessories, though pandemic-era growth categories, such as home and activewear, still increased 6 percent compared to 2019.
Though Bramman said Nordstrom’s second-quarter performance and momentum at the beginning of the third quarter gives the retailer confidence for the second half of the year, “there remains uncertainty in the external environment, and we continue to prepare for a range of scenarios,” including increased freight costs, supply chain disruptions and elevated labor costs in some markets.
Still, full-year revenue is expected to grow by at least 35 percent compared to 2020, an increase from Nordstrom’s previous projections of at least 25 percent revenue growth. “There’s just pent-up demand out there, and customers are looking to refresh what they’re wearing, and so across the board, we’re seeing a really positive response,” Bramman said.
Anniversary Sale Insights
The Seattle-based retailer said net sales for the entire company increased by 101 percent compared to the second quarter of 2020. Still, at $3.6 billion, net sales were down 6 percent compared to 2019. For the Nordstrom brand, net sales increased 127 percent year over year and decreased 5 percent compared to two years ago. Digital sales increased 30 percent versus last year and 24 percent versus 2019.
The quarter also saw a boost from Nordstrom’s annual Anniversary Sale, the retailer’s biggest sales event that is typically held in July, though the final week of this year’s sale landed in the third quarter, which executives said muted the full effect. Including that final week, though, anniversary event sales still increased 1 percent compared to 2019; last year, the event was fully moved to the third quarter because of COVID-19.
Bramman said Nordstrom learned a lot of lessons over the course of its Anniversary Sale about how to connect and engage with customers digitally and physically that it anticipates taking into the holiday shopping season and other major sales events. CEO Erik Nordstrom also said the retailer’s more data-driven approach to inventory helped increase selection during the Anniversary Sale by 12 percent and reduce the rate of out-of-stock items by 35 percent compared to 2019’s event.
“The process and execution of it is something that we can learn from, have improved upon, and it should benefit us,” the CEO said.
President and Chief Brand Officer Pete Nordstrom attributed the retailer’s quarterly results to “a compelling merchandise assortment, combined with new and differentiated services and experiences.” In June, Nordstrom said it would be partnering with Indochino to open nearly two dozen store-in-store locations after previously unveiling plans for 40 mini Tonal shops within its retail stores. Nordstrom also debuted a livestream shopping channel in March, part of its push to become a digital-first business.
Going forward, CEO Erik Nordstrom said the retailer intends to continue reacting to other opportunities similar to those with Tonal and Indochino. “Anything that’s of interest to our customers is something that we’re interested in pursuing,” he said, adding that “there is a willingness, an openness and the ability to pursue opportunities like that.”
Shop within shops, though not a new idea, have seen a resurgence in recent months as retailers look for ways to get consumers back in-store at a time when digital sales and conveniences like curbside pickup have taken a bite out of traffic. Earlier this week, for example, Target expanded its partnership with Disney to nearly triple its number of Disney shops-in-shops.
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