Key Nordstrom Rack Metrics
- Nordstrom full-line stores' trailing-twelve-month (TTM) sales per square foot increased $37 QoQ to $597. The digital segment of the business declined -6% (on an underlying basis), whereas the physical store segment increased +8%. Interestingly, this puts sales per square foot for the physical stores at $394, +22% above the $324 level experienced in 3Q19.
- Placer.ai shows traffic down about -10% compared to 2019, as such the +22% increase was driven by higher average unit retail (AUR) and a higher visitation/transaction conversion rate. Additionally, we suspect one reason for the traffic decline is fewer BOPIS transactions and pick-ups. We estimate that the full-line digital business for 3Q19 was flat to 3Q19 levels. As AUR was likely +10%-15% higher compared to 2019, transactions would be down an offsetting amount.
- The above results also come at a time when Nordstrom’s less-affluent (likely younger) customers are curtailing trips and purchases, which also explains why sales were more robust than transactions and traffic. CEO Eric Nordstom, “As we discussed, while reporting our second quarter results, we saw customer demand begin to soften in late June, mostly in Nordstrom Rack. Across both banners, the softening trend was more significant in customer segments with the lowest income profiles, while we saw greater resilience in the higher income cohorts…Customers continued to refresh their wardrobes and shop for occasions such as social events, travel, work and holidays...Consistent with the second quarter, items with lower AURs underperformed higher AUR items. Customers continued to respond very positively to newness and fashion in our seasonal assortment."
