Retail Channels
20 January 2023
Nordstrom holiday sales below pre-pandemic. It's not just the economy
Nordstrom Rack sales were down a sizable 7.6% from 2021.
Nordstrom | Nordstrom Mall Entrance, 1/2015 by Mile Mozart o… | Flickr (www.flickr.com)
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Nordstrom posted holiday results showing sales declines over the busiest retail season.
For the nine-week period ending Jan. 1, Nordstrom shared the following data:
- Net sales across all channels declined 3.5% from the same period of 2021.
- Nordstrom banner sales decreased 1.7%
- At Nordstrom Rack, which is Nordstrom’s off-price store, sales were down 7.6%.
- Outlook: Revenue growth for fiscal year 2022 is now expected to be at the low level of its 5-7% outlook. The adjusted EBIT outlook, which measures profit, was revised to 3.1 to 3.3%, down from 4.3-4.7%.
CEO Erik Nordstrom said the sales totals were even below 2019 norms.
"The holiday season was highly promotional, and sales were softer than pre-pandemic levels,” said Nordstrom, in a statement. “While we continue to see greater resilience in our higher income cohorts, it is clear that consumers are being more selective with their spending given the broader macro environment.”
On the supply side, Nordstrom also said it took more markdowns than planned toward the goal of ending the year in a clean inventory position. Year-end inventory is expected to finish at a double-digit percentage below 2021, and in line with 2019 levels, Nordstrom said.
"Having a healthier inventory level and mix positions us well to react quickly to changing consumer demand," said Pete Nordstrom, president and chief brand officer of Nordstrom. "Given the continued uncertain environment, we remain focused on executing with flexibility and agility, including conservative buy plans and faster inventory turns.”
Here are a few takeaways for anyone in retail to consider:
Macro woes
Following in the footsteps of Macy’s, Nordstrom is the latest department store retailer to post a more lackluster holiday period. The more difficult consumer picture, colored by converging inflation and interest rates, made the holidays particularly discount-heavy, which in turn hurt both topline sales and profits. Across retail, sales grew 5.3% for the holidays, which was below the National Retail Federation forecast.
Nordstrom's issues
The economic pullback is far-reaching enough that every retailer can likely feel justified in pointing to it at this time, especially as they continue to work out of inventory issues as Nordstrom did. In either case, discounts are the way to get through it, and those hurt margins.
But every retailer did not report uniform holiday declines. American Eagle, Abercrombie and URBN all reported sales growth during the holidays.
Some of Nordstrom’s issues appear to be internal. GlobalData Managing Director Neil Saunders noted that the Nordstrom decline of 1.7% was a “modest reduction,” but said it “was delivered at a time when Nordstrom should have come into its own as consumers took a keen interest in new fashions for the holidays. That it didn’t is a function of its own merchandising and inventory missteps.”
Adding to the problems, Nordstrom Rack posted a bigger decline, and “does not seem to have been able to get back on the front foot,” since the pandemic as a result of assortment and inventory issues at stores.
So what can be done? Saunders suggests adding categories beyond fashion.
“While department stores did put in some effort to create areas which showcased non-apparel gifts for the holidays, this was a rather half-hearted effort,” Saunders said. “In short, Nordstrom needs to think carefully about how it can maximize spending from its shoppers and make itself a must-visit destination.”
Digital chief departs
Nordstrom is also starting the year looking to fill a key digital leadership role.
Jason Gowans was named SVP and chief digital officer at Levi Strauss & Co., where he will focus on bringing together engineering, data, AI and digital product management in both ecommerce and go-to-market.
Gowans most recently served as SVP of digital commerce at Nordstrom, where he led ecommerce for both Nordstrom and Nordstrom Rack. It caps a decade-long run at the company where he also led data science and analytics across all functions.
While there's void to fill at the company, it's a reminder: Ecommerce remains a growing area for Nordstrom, with top talent. In fact, it might be a good place to test expansion into the new categories that Saunders suggested.
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Operations
08 June 2023
US imports expected to fall 22% in first half of 2023: NRF
Labor disputes on the West Coast could cause further disruption heading into peak season.
Photo by Venti Views on Unsplash
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”
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