• by Sarah Mahoney  @mahoney_sarah, December 3, 2024

Nordstrom is defying the financial pressure that’s hampering other department stores with third-quarter financial results that beat expectations. The Seattle-based retailer also unveiled a robust series of holiday marketing efforts that should set it up for a jolly fourth-quarter performance, even as management stays mum on the bid from family members to take the company private.

Sales rose 4.6% in the third quarter of the fiscal year to $3.35 billion, up from $3.2 billion in the year-ago period, when observers had expected them to be flat. That gain is especially impressive given that revenues were negatively impacted by the shift in the timing of Nordstrom’s Anniversary Sale, which moved into the second quarter this year.

Sales at the higher-end Nordstrom banner notched a 4% gain in comparable sales, while comparable sales at Nordstrom Rack, its off-price chain, gained 3.9%. Digital sales grew 6.4%.

Women's apparel and activewear had double-digit growth, while shoes, men's, and kids' apparel were up in the mid to high single-digits.

Third-quarter net earnings came in at $46 million, down from $67 million, ahead of Wall Street expectations.

The retailer’s “focus on curating a compelling brand assortment is resonating with customers," said Pete Nordstrom, president of Nordstrom, in the announcement. "Our actions throughout this year have led to this moment, and we feel well-positioned for a successful holiday season and look forward to helping our customers celebrate the moments that matter.”

That positioning includes a slate of holiday marketing efforts, with a refreshed app that combines the “richness” of in-store shopping with digital ease. It offers better gift finding, personalized recommendations, style suggestions, and two-day shipping in most markets. And in addition to standard fare, like visits with Santa, Nordstrom is offering more beauty events, with free tutorials, services and samples from top brands.

In New York, the company set up “The Blizz,”* an immersive experience available throughout the store. Those include larger-than-life inflatables of New York characters voiced by director John Waters and actress Fran Drescher.

The retailer is also peddling iconic NYC and Seattle experience packages, including tickets to the “Radio City Christmas Spectacular,” “The Nutcracker,” and Mariah Carey’s Christmas Time Concert, a meal at Tavern on the Green, and a stay at the New York Plaza Hotel.

Nordstrom’s unexpected strength comes just after department-store competitors revealed ongoing struggles, with sales at Macy’s falling 2.4% and revenue at Kohl’s plunging 9.3%.

“The plan to improve operating efficiency, expand Rack, and improve Nordstrom banner sales is working in a tough retail environment,” writes David Swartz, an analyst who follows Nordstrom and other retailers for Morningstar.

But he notes that Nordstrom did not provide any update on the $3.8 billion offer to take the company private, which was first announced in September. Swartz writes that the $23-per-share offer from the Nordstrom family and El Puerto de Liverpool is not likely to be accepted.

“We regard the offer as low relative to our $38.50 fair value estimate,” he says. “Our expectation is that the board will ask for a higher price, and it seems that the market agrees as Nordstrom’s shares have been trading above $23. It is not known if the buyout group will raise its bid, but we think it is likely as it appears to be motivated and well-funded.”

*An earlier version misspelled the name of the holiday activation.