No Surprises For Nordstrom In Second Quarter
Tuesday, August 19, 2014 at 7:51PM August 14, 2014
Nordstrom's second quarter earnings were in line with its expectations. The results come two weeks after the company said it was acquiring Trunk Club, a men's personalized clothing service, for $350 million.
Profit for the quarter remained flat compared to last year's second quarter at $183 million. Net sales for the quarter were $3.3 billion, a 6.2% increase from $3.1 billion in the prior-year quarter. Comparable sales increased 3.3%.
Nordstrom Rack net sales increased $114 million, or 18%, compared with the same period in fiscal 2013, reflecting incremental volume from existing stores and the impact of 25 store openings since the second quarter of fiscal 2013. Nordstrom Rack comparable sales increased 4%.
The Nordstrom Rewards loyalty program continues to contribute to overall results, with members shopping more frequently and spending more on average than non-members. The company opened nearly 370,000 new accounts in the second quarter, an increase of 18% compared with the same period last year. With 4.1 million active members, sales from members in the second quarter increased 11% in the second quarter and represented 44% of sales, from 42% for the same period last year.
Nordstrom entered into an agreement to acquire Trunk Club July 31. Founded in 2009, Trunk Club delivers a stylist service that combines the convenience of online with a high-touch, personalized shopping experience. Trunk Club is a high-growth company and expects to achieve operational profitability and more than double its annual sales to more than $100 million. The company believes this acquisition represents a natural extension of its core business, aligns with its strategic priorities around a relevant customer experience and accelerates entry into this fast-growing market.
Trunk Club will operate as an independent, wholly owned subsidiary and will be managed by its current leadership. The transaction is expected to close in the third quarter, subject to closing conditions including customary regulatory and shareholder approvals.
Nordstrom plans to open three full-line stores (The Woodlands, Texas; Calgary, Canada and Jacksonville, Florida) later this year. To date in fiscal 2014, the company opened 11 Nordstrom Rack stores and plans to open 16 additional stores during the remainder of the year. In the second quarter of 2014, the company opened a Nordstrom Rack store in Manhasset, New York.
Source: Retailing Today
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