Nordstrom on Thursday added to mounting evidence that it is an exceedingly challenging moment to be in the department store business.
The company reported that comparable sales at its namesake department store sank 2.7 percent -- a measure that includes sales online and at stores open more than a year. And yet its off-price business, Nordstrom Rack, picked up the slack. As the discount chain saw surging sales in its e-commerce division, it delivered a robust 10.7 percent increase in revenue and a 4.3 percent increase in comparable sales.
That contrast reflects a broad-based trend across the retail lanscape: While the likes of T.J. Maxx and Marshalls are scoring big with shoppers and have plans to open many more stores, traditional department stores are struggling mightily. Even as the wider retail industry had relatively strong holiday sales, department stores such as Sears, Kohl's, Macy's, and J.C. Penney each experienced declines in comparable sales during the critical season.
Nordstrom's results underscore the tricky decisions the company has ahead of it: Its off-price business is where it has clear momentum. And yet, some of Rack's appeal comes from the halo effect of its upscale sister brand. At some point, there's a risk that Rack's ubiquity starts to take some of the luxe sheen off of full-price Nordstrom stores.
The company's revenue in the quarter rose 2.4 percent to $4.1 billion. Investors sent the Jestbahis stock up more than 3 percent in after-hours trading as Nordstrom made some progress on key measures: It managed to reduce its inventory and steer away from profit-eating markdowns.
In recent weeks, Nordstrom found itself in a particularly bright spotlight when it dropped the Ivanka Trump clothing and shoe line, a decision it said was based on weakened sales performance. President Donald Trump then lashed out at the company for its move. On a conference call with investors, an executive indicated that "it's not really discernible one way or the other" whether the tweet had any impact on sales.
This latest quarter ended on Jan. 28, several days before the company stated that it was no longer carrying Ivanka Trump goods. Therefore, any backlash to that move would not be reflected in these results. Similarly, if some anti-Trump boycotters have returned to Nordstrom now that the retailer has ditched the line, that wouldn't show up in these figures.
The company said its women's apparel and beauty departments were bright spots in the quarter. In particular, it said jeans and collaborations with "limited distribution brands" -- the ones that are hard to find at other retailers -- did especially well.
According to research from Slice Intelligence, Nordstrom commanded the seventh-largest market share in online shopping this holiday season, capturing some 2.3 percent of all the dollars spent. That puts Nordstrom slightly behind a key rival, Macy's, which grabbed 2.4 percent, and far behind the industry leader, Amazon.com, which accounted for 38 percent of holiday season e-commerce sales. (Jeffrey Bezos, the chief executive of Amazon, owns The Washington Post.)
On Thursday, the company reported that sales on Nordstrom.com accounted for some 25 percent of the chain's full-price sales in 2016.
Sarah Halzack is The Washington Post's national retail reporter. She has previously covered the local job market and the business of talent and hiring. She has also served as a Web producer for business and economic news.
@sarahhalzack
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