Nordstrom Reports Significant Drop in Q3 2024 Net Earnings

Retailer Nordstrom has announced its third-quarter earnings for fiscal year 2024, and the results revealed a surprising decline in net earnings. For Q3 2023, the department store chain reported earnings of around $67 million, significantly more than the $46 million just published for the most recent quarter. EPS (earnings per diluted share) also dropped from 41 cents in Q3 2023 to 27 cents.

Yet, the report did show some positive figures. In Q3 2024, which ended Nov. 2, Nordstrom saw a 4.6% increase in net sales compared to the same quarter last year, climbing from $3.20 billion to $3.34 billion.

Comparable sales, which is a measure of same-store purchases, jumped 4% year over year. Accounting for about one-third of revenue, online retail sales grew 6.4%. Profit also showed promise. As a percentage of sales, gross margin went from 35% to 36.6%.

“The continued sales growth across the company and strong gross margin in the third quarter indicate our team’s focus and efforts are working,” stated CEO Erik Nordstrom in the earnings report.

Nordstrom executives blamed the drop in net earnings in the third quarter on higher expenses, specifically increases in labor and technology. Additionally, the retail industry has been under pressure as customers remain more sensitive to prices and selective about nonessential purchases.

Nordstrom’s Slow Path to Growth

The retail giant’s off-price chain, Nordstrom Rack, saw a 3.9% increase in comparable sales in the previous quarter. While the company considers the Rack brand a weakness in its portfolio, it isn’t giving up on it and wants to make it work. Since the beginning of 2024, the retailer has opened 23 new Nordstrom Rack locations and intends to open more in the coming years.

Nordstrom also made some improvements to its online shopping experience. Enhanced search and discovery functions were added to both the website and app. More items priced at $100 or less are also now available to buy. Same-day pickup for some orders is another improvement to its digital retail segment.

Earlier this year, Nordstrom launched an online marketplace to offer more brands and to attract younger customers. The third-party shop site includes brands, such as AdoreMe and Mulberry, carefully curated by Nordstrom’s buying team.

Even though the holiday shopping season is just ramping up, the retailer forecasts earnings will remain relatively flat for 2024 overall. Full-year revenue will likely rise 0%-1%, which is just slightly better than the company’s previous estimates of a 1% loss to 1% growth.