Miami, Florida, Coral Gables Shops at Merrick Park, Nordstrom Department Store with shopper entering.
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Nordstrom on Thursday reported lower sales and profits for the vacation quarter, although earnings topped Wall Street’s expectations.
The corporate said it expects sales to say no in the brand new fiscal 12 months, reflecting partially its decision to wind down its Canadian operations.
“We entered Canada in 2014 with a plan to construct and sustain a long-term business there. Despite our greatest efforts, we don’t see a sensible path to profitability for the Canadian business,” CEO Erik Nordstrom said in a release Thursday.
Here’s what the department store reported for the fiscal fourth-quarter compared with what analysts were anticipating, based on Refinitiv estimates:
- Earnings per share: 74 cents vs. 66 cents expected
- Revenue: $4.32 billion vs. $4.34 billion expected
Nordstrom has struggled with slower sales, more markdowns and scrutiny from a distinguished activist investor. Its net income within the period ended Jan. 28 fell to $119 million, or 74 cents per share, from $200 million, or $1.23 per share, a 12 months earlier.
For the brand new fiscal 12 months, Nordstrom expects revenue to fall 4% to six%. It also projected EPS of 20 cents to 80 cents for the 12 months.
Michael Maher, interim chief financial officer, said Nordstrom factored a tougher economic backdrop and better costs into its year-ahead forecast.
“We expect that elevated inflation and rising rates of interest will proceed to weigh on consumer spending, especially in the primary half of the 12 months,” he said on a call with investors. “We also anticipate continuing inflationary pressure on our expenses especially labor and transportation costs.”
He said the outlook included an roughly 2.5-percentage-point negative impact from the wind-down of its operations in Canada, a business that drove about $400 million in sales within the fiscal 2022 12 months.
As of Jan. 28, the corporate said it had six Nordstrom stores and 7 Nordstrom Rack stores in Canada. Nordstrom said it ceased its Canadian e-commerce platform Thursday. It expects to complete Canadian store closures in Canada by late June.
Even before Nordstrom reported earnings, it cut its forecast and told investors that it had a rough holiday. In January, the department store chain said its net sales dropped 3.5% for the nine-week period that ended Dec. 31 compared with the year-ago period. Its net sales declined sharply during that stretch at its off-price banner, Nordstrom Rack.
One in every of the explanations for disappointing sales? More markdowns. Nordstrom said it discounted merchandise greater than expected in November and December, so it could start the fiscal 12 months with a healthier level of inventory.
The corporate drew attention and saw its stock soar in February, as activist investor Ryan Cohen bought a big stake in the corporate. Cohen, the chairman of GameStop and founding father of Chewy, is involved in using that position to push for change — including getting former Bed Bath & Beyond CEO Mark Tritton off of Nordstrom’s board.
Cohen bought, and later sold, a significant stake in Bed Bath, after criticizing Tritton’s strategy and pushing for change at that company, too.
As of Thursday’s close, Nordstrom shares are up greater than 19% this 12 months.
Read the total Nordstrom earnings release.
