SEATTLE — Seattle-based Nordstrom (NYSE: JWN) has reported a 53 percent decrease in net sales from last year for the second quarter ended Aug. 1, reflecting temporary store closures due to COVID-19. The company experienced a second-quarter net loss of $255 million, which included after-tax COVID-19-related charges of $14 million, a decrease from net earnings of $141 million during the same period in fiscal 2019.
While the reductions were in line with the company’s expectations, Nordstrom still managed to generate positive operating cash flow of more than $185 million, with total liquidity of $1.3 billion, through improved merchandise margins and significant overhead cost reductions. The company’s exceeded cash flow enabled it to pay down $300 million on its revolving line of credit.
“At the onset of the pandemic, we focused on protecting and enhancing liquidity, and we successfully executed on these plans,” says Erik Nordstrom, chief executive office of Nordstrom.
During the first quarter, Nordstrom reduced its inventory by more than 25 percent to mitigate markdowns and seasonal inventory and bring in newness for customers, resulting in second-quarter merchandise margin trends improving and exceeding expectations.
In preparation for its yearly anniversary sale, which began August, the company increased inventory to meet customer demand. Anniversary numbers are tracking in-line with expectations. Although the company’s total digital sales have decreased by 5 percent, its second-quarter digital sales increased 20 percent and its e-commerce business continues to see growth in new Nordstrom customers of more than 50 percent.
“We are confident that we can improve sales trends in the second half of the year and beyond,” said Peter Nordstrom, president and chief brand officer of Nordstrom. “Our inventories are current and in-line, and we’re focused on amplifying relevant categories, brands and trends to meet customers’ changing preferences.”