Nordstrom (JWN) revenue (retail sales plus credit card revenue) fell 3.3% to $3.44 billion in the first quarter of fiscal 2019, which ended on May 4. Analysts were expecting revenue of $3.58 billion. Nordstrom’s net sales declined 3.5% to $3.35 billion with full-price business sales down 5.1% to $2.13 billion and off-price sales down 0.6% to $1.22 billion. The soft sales trend that Nordstrom experienced in fiscal 2018’s fourth quarter further worsened in fiscal 2019’s first quarter.
Executional missteps associated with the roll-out of a modified loyalty program (including the introduction of Nordy Club) led to lower customer traffic in the company’s full-price and off-price business. Also, the company reduced its digital marketing as it focused more on its loyalty program. This had an adverse impact on first-quarter digital sales. Nordstrom’s digital sales rose by only 7% in the first quarter compared to a 16% growth in fiscal 2018. Nordstrom’s revenue was also affected by issues related to merchandise, mainly women’s apparel and beauty.
Nordstrom’s credit card revenue rose 2.2% to $94 million in the first quarter. Aside from Nordstrom, other department stores also had a challenging first quarter. Kohl’s (KSS) net sales declined 3.3% to $3.82 billion, while Macy’s (M) net sales fell 0.7%, though its same-store sales grew 0.7% in the first quarter.
Nordstrom is enhancing its merchandise offering and has addressed the operational issues associated with the Nordy Club rollout. Nordstrom expects weakness in the first quarter to continue in the second quarter, with gradual improvement expected in fiscal 2019’s second half. Nordstrom now expects its fiscal 2019 net sales in the range of -2% to 0% compared to the previous growth forecast range of 1% to 2%. Nordstrom’s credit card revenue growth is expected in the low-to-mid-single-digit range compared to the previous forecast of the mid to high single-digit range.