Q2 2025 Earnings Summary
Reported on Aug 27, 2024 (After Market Close)
Pre-Earnings Price$21.14Last close (Aug 27, 2024)
Post-Earnings Price$22.00Open (Aug 28, 2024)
Price Change
$0.86(+4.07%)
- Nordstrom Rack is delivering strong growth and solid returns: The Rack stores are achieving mid- to high-teens Internal Rate of Return (IRR), and the company plans to open 23 new Rack stores this year, indicating confidence in continued expansion. The positive momentum in comparable Rack stores, new store openings, and growth in rack.com signal ongoing growth in the Rack segment.
- Gross margin expansion indicates improved profitability: Gross margin expanded by approximately 155 basis points year-over-year to 36.6%, one of the highest in recent history, driven by strong regular price sales in both the Nordstrom and Rack banners. The company expects a small amount of gross margin expansion for the full year, supporting profitability improvements.
- Strong performance in private brands and key categories suggest growth potential: Private brands, especially in women's apparel, showed significant success during the Anniversary Sale, with mid-single-digit growth and Nordstrom brand and Zella as top volume brands. Success in women's apparel, a significant category, provides confidence for future growth.
- Despite exceeding second quarter earnings expectations, Nordstrom only slightly increased its full-year earnings guidance, noting that two-thirds of profits typically come in the second half and that the external environment remains uncertain, reflecting a cautious outlook for future performance.
- The designer category remains challenging, with sales returning to 2019 levels after previous growth. It is hard to predict if this category has leveled out, indicating potential ongoing weakness in a high-margin segment.
- Credit losses are ticking up modestly this year, consistent with industry trends, which may impact financial results.
Research analysts covering JWN.