• by Sarah Mahoney  @mahoney_sarah, June 1, 2023

Although its sales dropped for the quarter, Nordstrom still performed better than observers expected, indicating that luxury spending is holding its own. But trends at Nordstrom, along with the latest Luxury Spending Report from rival Saks Fifth Avenue, reveal a decidedly conservative spending vibe among upper-income fashion lovers.

The Seattle-based Nordstrom says net sales dipped 4.1% to $4.2 billion in its fiscal fourth quarter, compared to $4.38 billion. The drop was relatively small -- 2.4% -- in the Nordstrom banner, but a painful 8.1% at Nordstrom Rack, the off-price division. And ecommerce sales, long a source of growth, fell 13%.

Net earnings fell to $119 million from $200 million in the year-ago period.

Those results came in better than earlier forecasts, and the company announced it has substantially reduced its inventory, cheering analysts. Nordstrom also shut down its Canadian operations.

"As we enter fiscal 2023, we are focused on enhancing the customer experience, improving Nordstrom Rack performance, increasing inventory productivity and continuing to advance our supply chain optimization initiatives," said Erik Nordstrom, chief executive officer of Nordstrom, in the announcement. "We remain confident in the strength of our brands and our ability to drive profitable growth."

Men's clothing performed best.

David Swartz, an analyst who follows the company for Morningstar, writes that Nordstrom is making progress on strategic initiatives "despite uneven consumer spending."

Profit margins improved even as sales declined. "We view this result as a sign that its efforts to lower its inventory, turn its merchandise more quickly, and increase full-price selling are working."

Other luxury retailers are seeing a change, too. The new Saks Luxury Pulse survey finds that well-heeled shoppers are prioritizing saving money and travel plans over luxury goods. Saks reports that 60% of those in its survey are more concerned about the economy, despite 57% declaring optimism about their personal financial health.

And just 53% plan to spend the same or more on luxury in the next three months compared to the previous three months. That compares to 62% in the last survey, signaling a coming dip in spending in purchases of luxury goods.

Those earning more than $200,000 annually are also pulling back, with 57% planning to spend the same or more, versus 68% in the January research. Millennials are also trimming their spending plans.

Overall, 82% say they prioritize saving the same or more in the next three months, and 71% plan to spend the same or more on travel. More than three-quarters have already booked trips for the summer.

The Saks survey includes 3,700 luxury shoppers in the U.S., all 18 and older.