Macy's and Nordstrom's online sales decline as U.S. consumer demand slumps

It is learned that on March 3, Macy's and Nordstrom, two major US retailers, released their fourth quarter and full-year financial reports for 2022. The reports showed that due to continued sluggish consumer demand, online sales of both retailers fell sharply, while the problems of excess inventory and large discounts eroding profits still existed.

Nordstrom and Macy’s both reported larger declines in online sales than in-store sales, and Macy’s said its heavily promoted private-label brands performed worse than its premium brands.

Macy's said its online sales fell 9% in the fourth quarter ending January 28, 2022, but were 24% higher than the same period in 2019. Brick-and-mortar store sales performed better, down only 2% year-on-year. Macy's ranks 16th in the 2022 DigitalCommerce360Top1000.

Nordstrom's e-commerce sales business also felt similar pressure during this period. Digital sales in the fourth quarter ending January 28 fell 13% year-on-year, accounting for 40% of total sales in the quarter. Nordstrom ranked 20th in the 2022 DigitalCommerce360Top1000.

Macy's: Discounts hurt profit margins

Macy's gross margin was 34.1% in the fourth quarter, down from 36.5% in the same period last year, and it attributed the decline in profits to larger markdowns and promotions than in 2021, driven by excess inventory.

Macy's total store sales fell just 2.7% in the fourth quarter of last year. Chief Executive Jeff Gennette said in a statement that this was mainly due to strong growth in the retailer's high-end brands Bloomingdale's and Bluemercury, while sales of its low-end private-label products fell 3.3%.

Gennette said discretionary spending will face pressure at all income levels, with spending shifting toward services and necessities, but demand for gifting and occasion-based products is expected to remain strong. At the same time, Macy's will focus on growth areas, including private brands, off-mall expansion and luxury goods.

Nordstrom Rack store sales slow

Like Macy's, Nordstrom is struggling to sell discounted merchandise, and while its competitors have been thriving with low-price discounts, Nordstrom's Rack discount rack business has been struggling, with sales still below pre-pandemic levels and market share continuing to decline.

Sales at Nordstrom Rack stores fell 8.1% in the quarter, while sales at Nordstrom-banner stores fell 2.4%. The retailer still plans to open 20 Rack stores starting in the spring, as off-price shoppers often prefer in-store shopping.

Sales at U.S. department stores have been mixed in recent months, suggesting demand from U.S. consumers has weakened amid stubbornly high inflation. But Nordstrom said reduced inventory and the closure of its Canadian business will improve results in 2023.

Macy's Earnings Summary

For the quarter ended January 28, Macy's reported:

• Net sales fell 4.6% year-over-year to $8.3 billion.

• Digital sales were down 9% from 2021, and in-store sales were down 2%.

• Net income was $508 million, down from $742 million in 2021.

For the fiscal year ending January 28, Macy's reported:

• Net sales were $24.4 billion, down 0.1% from 2021.

• Digital sales were down 6% from 2021, while in-store sales were up 3%.

• There were 42.7 million active customers, down 4%.

• Net income was $1.1 billion, down from $1.4 billion in 2021.

Nordstrom Earnings Summary

For the quarter ended January 28, Nordstrom reported:

• Revenue was $4.3 billion, up 5% year-over-year.

• Net sales fell 4.1% to $4.2 billion.

• Digital sales, which account for 40% of total sales, fell 13.1%.

For the fiscal year ending January 28, Nordstrom reported:

• Net sales were $15.1 billion, up from $14.4 billion in 2021.

• Revenue was $15.5 billion, up from $14.8 billion the year before.

• Digital sales accounted for 38% of total sales, down from 42% in 2021.

• Nordstrom opened three stores in 2022.

Editor✎ Ashley/

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