Nordstrom Inc on Tuesday reported better-than-expected results for the holiday quarter, aided by a rise in e-commerce sales and growth in its off-price business, Rack.

Pandemic-induced declines in household income and high unemployment rates have led to a spike in demand for affordable clothing, which boosted Rack’s business for Nordstrom that also benefited from a greater shift to online shopping.

Sales at Nordstrom Rack decreased 23 percent from a year earlier, but were better than previous quarter’s 32 percent slump, while digital sales of about $2 billion accounted for 54 percent of the retailer’s business.

The retailer said overall trends improved sequentially throughout the quarter, with improvements in both Nordstrom and Rack.

Nordstrom, like other retailers, has been investing heavily in e-commerce, as consumers shift to shopping online in the wake of the health crisis.

The retailer reiterated its revenue forecast and said it will grow more than 25 percent this year, with digital accounting for half of the sales and its plans to increase the items it offers to more than 1.5 million from roughly 300,000.

“There is no denying that their (Nordstrom) Q4 results were impacted, as fewer consumers go to offices and formal events,” said Hilding Anderson, head of retail strategy at consulting firm Publicis Sapient.

“We expect apparel sales to rebound in the second half of 2021 as the vaccine rollout continues and more consumers begin to travel and resume other in-person events.”

Total revenue fell 19.7 percent to $3.65 billion in the fourth quarter ended Jan. 30. Wall Street had forecast $3.60 billion, according to analysts surveyed by Refinitiv IBES.

Net income fell 83 percent to $33 million, largely hurt by higher markdowns and COVID-19-induced labour and shipping expenses during the holiday season.

On a per share basis, it earned 21 cents, well above the estimate of 14 cents.

By Nivedita Balu; Editor: Shinjini Ganguli