Nordstrom differentiates with digital while Crocs, Hollister court younger audiences: Q2 earnings insights

A strong digital presence drove Nordstrom Rack's Q2 growth, while Crocs hopes to revitalize its HEYDUDE brand by focusing on a younger, female audience. Hollister is leveraging back-to-school promotions and targeted marketing initiatives to reintroduce the brand to younger consumers.

Here are three insights into each retailer’s Q2 performance.

1. Digital drives growth for Nordstrom Rack

Net sales for Nordstrom Rack, Nordstrom’s off-price brand, increased 8.8% in Q2, with comparable sales increasing 4.1%.

• This growth is partially driven by Nordstrom’s expansion of Rack stores, opening 11 new locations year-to-date with 12 more planned ahead of the holidays.
• However, the brand’s digital presence is also driving growth, as digital sales grew by 6.2% in Q2, the fifth consecutive quarter of sequential improvement for the retailer.
• “The digital piece -- it is a point of differentiation,” said CEO Erik B. Nordstrom in a recent earnings call. “There's not many online off-price retailers out there.”

Nordstrom Rack’s success is also due to the “high degree of overlap with the brands customers find at Nordstrom stores,” said Nordstrom.

“It works for us because it’s part of our bigger ecosystem. And we see more opportunities there to leverage on the capabilities to engage with customers more and get a bigger share of the wallet.”

2. Crocs tries to revive the HEYDUDE brand

Revenues for the HEYDUDE brand were down 17.5% YoY as Crocs struggled with its wholesale business, despite launching several new partnerships in Q2, including a four-piece shoe line in collaboration with beer brand Corona.

• “Our wholesale business for HEYDUDE remains challenging and we expect that to continue through the second half of the year,” said CEO and director Andrew Rees in an earnings call.

Looking ahead, Crocs plans to ramp up its marketing investment in the HEYDUDE brand, targeting younger, female consumers.

“We believe the younger female consumer drives youth culture,” said Rees. “If we can engage and energize a female, younger female consumer, we know that's going to spread passion for the brand to a much broader range of consumers and drive the brand overall.”

3. Hollister goes back to school

Net sales for Hollister, a brand under the Abercrombie & Fitch umbrella, grew 17% in Q2, driven by a “better-then-expected” summer and back-to-school performance.

• To capitalize on that momentum, Abercrombie launched the Hollister Collegiate Graphic Shop, a collection of vintage-inspired apparel with logos and graphics from over 30 universities across the US.
• “We're investing in incremental marketing to increase engagement and reintroduce Hollister brands to our target audience,” said CEO Fran Horowitz in an earnings call. “We believe product collections like this can help bring new customers into the brand.”

In April, Hollister launched its Feel Good Fest Music Program, a series of concerts taking place at high schools and other venues across the country, featuring Gen Z artists like Benson Boone, Boys World, and Claire Rosinkranz.

This is part of a two-year initiative to reintroduce the Hollister brand to a younger audience.

“It was actually two years ago this quarter when we took a step back a bit and had to really inspect what was going on with our back-to-school and our Hollister brand which we spent a lot of time rebuilding and rebranding,” said Horowitz.

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