Department store chain Nordstrom continued to report sales growth in the second quarter led by a considerable improvement at Nordstrom Rack.

For the quarter ended August 3, net sales increased 3.4 per cent year-on-year to $3.8 billion, extending the 5.1 per cent growth in the first quarter. Comparable sales grew at a slower rate of 1.9 per cent. 

The sales boost was flattered by a shift in the timing of the Anniversary Sale, which added 100 basis points to the growth, the company noted.

According to GlobalData MD Neil Saunders, Nordstrom may be making progress, but it is still recovering from a long period of torrid trading. Compared to 2022, sales remain down by 5.2 per cent overall with all the decline coming from the department store division. 

Saunders described Nordstrom as the company of two halves. Its off-price Rack division saw sales growth of 8.5 per cent in total terms and 4.1 per cent on a comparable basis, while the department store division was up only 0.9 per cent on both terms.

The analyst attributed Rack’s improvement to a better choice of brands, which provided consumers with a more compelling offer and encouraged repeat visits.

The modest uplift of the department store segment reflects the general market dynamics, he continued, adding that Nordstrom is still doing better than its rivals.

On the bottom line, the company’s net earnings were down from $137 million to $122 million due to a higher tax expense.

For the full year, the company expects revenue growth in the range of a 1 per cent decline to a 1 per cent increase, while comparable sales are forecast to be flat or up 2 per cent.

Although the guidance is more positive than it was last quarter, it still reflects a gentle recovery rather than showing that the firm is charging full steam ahead, Saunders elaborated.

“If it is sustainable, then it’s not a bad course of action – although it is one that is more suited to a private company than a listed entity,” he added.