Nordstrom Inc beat market estimates for first-quarter sales on Wednesday as demand from wealthy shoppers cushioned a wider, inflation-driven slowdown in spending on clothing and accessories.
The upmarket department store chain maintained its forecasts for 2023 sales and adjusted profit, and reported a 110-basis-point increase in quarterly gross margins, thanks to easing cost pressures and tighter inventory management.
Affluent Americans are still spending on clothing as return-to-office trends and other social gatherings drive up demand for dresses and formal wear. Companies have also ramped up promotions and discounts to clear excess inventories.
In a bid to attract more budget-conscious shoppers, Nordstrom has been opening new stores under its off-price banner Rack.
While quarterly sales at Rack decreased 11.9%, Nordstrom said trends improved later in the quarter, driven by its moves to stock up shelves with crowd-favorite brands.
The retailer's inventory decreased 7.8% at quarter-end, with activewear, beauty and men's apparel performing well in the three months ended April 29.
Nordstrom joins apparel chain Abercrombie & Fitch Co in bucking a broader gloom in retail, after companies ranging from Target Corp to Home Depot Inc all issued cautious forecasts for the year.
Total revenue at the company fell to $3.18 billion in the quarter, from $3.57 billion a year earlier. Analysts on average had expected $3.12 billion, according to Refinitiv IBES data.
On an adjusted basis, the company reported a profit of 7 cents per share.
(Reporting by Deborah Sophia in Bengaluru; Editing by Devika Syamnath)
