Off-Price and E-Commerce Offer Nordstrom Salvation
Sales at Nordstrom tumbled 40% during the first quarter due to the temporary closure of stores, while e-commerce accounted for slightly more than half of the company’s remaining sales and was viewed as a bright spot.
Nordstrom sales declined 40% to slightly more than $2 billion during the quarter ended May 2, as a result of the temporary closure of stores which began on March 17. The steep decline in revenue caused the company to post a massive $521 million loss, compared to a prior year profit of $37 million, but senior management was not discouraged by the decline.
"We successfully strengthened our financial flexibility by increasing liquidity, lowering inventory by more than 25% from last year and significantly reducing our cash burn by more than 40% from March into April," said CEO Erik Nordstrom. “We're entering the second quarter in a position of strength, adding to our confidence that we have sufficient liquidity to successfully execute our strategy in 2020 and over the longer term."
Total company digital sales grew 5% to reach $1.1 billion in the first quarter and while stores were temporarily closed, the company said its e-commerce business experienced significant growth in new customers of more than 50%.
"It is clear we can seamlessly engage with customers through our Nordstrom and Nordstrom Rack brands, across stores and online. We have a unique mix of assets, and the flexibility of our business model continues to serve us well," said Pete Nordstrom, president and chief brand officer of Nordstrom. "In 2019, our off-price and e-commerce businesses accounted for nearly 60 percent of sales. As we anticipate an acceleration of these longer-term customer trends, we're taking proactive steps to move faster in executing our strategic plans."
Nordstrom operates 354 stores in 40 states, including 100 full-line stores in the United States and Canada, 247 Nordstrom Rack stores, two clearance stores and five Nordstrom Local service hubs.