Nordstrom Lowers Forecasts; Luxury Shoppers Spend More
Nordstrom says that while its second-quarter sales increased, the gains were less than it expected, causing it to lower its forecasts for the rest of the year. But the news comes at a time when affluent shoppers are gaining in confidence, and spending more freely in many categories.
The Seattle-based retailer says sales climbed 6.4% to $3.1 billion in the second quarter, gaining 4.4% on a same-store basis. And net income rose to $184 million compared with $156 million for the same quarter a year ago. Top-performing categories included men’s shoes and apparel, as well as children’s clothing. Sales at its Nordstrom Rack division increased $69 million, or 12%, reflecting 17 new store openings.
“Sales trends throughout the second quarter showed moderate improvement relative to the first two months of the year but remained softer than anticipated,” it says in its release. As a result, it lowered its forecast, and now anticipates an annual same-store sales gain of between 2 and 3%, down from its early prediction of between 3% and 5%.
Despite Nordstrom’s subdued results, there are plenty of indications that affluent consumers are feeling more upbeat, and spending more as a result. Unity Marketing’s latest read on affluent consumers (the top 20% of Americans that do 40% of all consumer spending) indicates they are primed to spend more on both back-to-school and the holidays this year. The market research company’s latest Luxury Consumption Index jumped 15.9%. (The index is based on data from some 1,200 affluent consumers, with an average household income of $273,200 per year.)
"We have seen plenty of minor spikes in affluent consumer confidence since 2010, but the latest one at the start of the third quarter 2013 feels different that the others,” writes Pam Danziger, president of Unity Marketing, in its report. “It has all the markings of a sustainable recovery that will give affluents the confidence to spend more freely through the end of the year,"
For one thing, she writes, they feel more optimistic, with 32% saying they believe the country as a whole is better off financially, compared to 27% at the start of the second quarter. And 27% say they are spending more on luxury items, compared with 23% last quarter.