In the third quarter of fiscal 2018, Nordstrom has delivered outsized digital sales growth of 20 per cent, which represented 30 per cent of sales, on a year-to-date (YTD) basis. Nordstrom’s generational investments in new markets and digital businesses continued to scale, contributing approximately half of the year-to-date net sales increase.
Total net sales of the American chain of luxury department stores went up 3.0 per cent for the third quarter ended November 3, 2018 compared with the quarter ended October 28, 2017. This included an unfavourable timing shift of approximately 100 basis points, primarily from the reversal of the second quarter impact of the new revenue recognition standard as it relates to the timing of the anniversary sale.
Comparable sales are aligned with the 53-week calendar in 2017. Comparable sales grew 2.3 per cent in the third quarter, compared with the 13-week period ended October 28, 2017. This reflected a continuation of underlying trends with a year-to-date increase of 2.4 per cent.
Gross profit, as a percentage of net sales, of 33.3 per cent decreased 137 basis points compared with the same period in fiscal 2017. Earnings before interest and taxes (EBIT) were $105 million, or 2.9 per cent of net sales, compared with $208 million, or 5.9 per cent of net sales, during the same period in fiscal 2017.
Selling, general and administrative expenses, as a percentage of net sales, of 33.1 per cent increased 188 basis points compared with the same period in fiscal 2017. Excluding the estimated credit-related charge of $72 million, selling, general and administrative expenses, as a percentage of net sales, was relatively flat compared with the same period in fiscal 2017. This reflected moderated growth of digital capabilities due to ongoing efforts to drive productivity improvements. Excluding the estimated charge, the company is on track to achieve its plan for mid-single-digit growth in selling, general and administrative expenses for the year.
Third quarter net earnings were $67 million compared with $114 million during the same period in fiscal 2017. Excluding an after-tax impact of $49 million for the estimated credit-related charge, net earnings were relatively flat. The company opened two additional Nordstrom Local neighborhood hubs in the Los Angelesmarket, in Brentwood and downtown, to provide customers with more convenient access to its services.
Excluding the non-recurring estimated credit-related charge of $72 million, or $0.28 per diluted share, Nordstrom remains on track to achieve an inflection point for profitable growth in fiscal 2018. Net sales is projected to be between $15.5 billion to 15.6 billion. Fourth quarter EBIT is expected to reflect a favourable comparison of $16 million from a one-time employee investment associated with last year’s tax reform.