Shoppers exit the Nordstrom on the Westfield Topanga mall in Los Angeles on Aug. 14, 2023.
Christina House | Los Angeles Times | Getty Images
Nordstrom’s holiday-quarter sales topped Wall Street’s expectations on Tuesday, however the retailer gave a muted outlook for the yr ahead, and shares fell about 10% in prolonged trading.
The Seattle-based company said it plans to open latest Nordstrom Rack stores and drive higher online and in-store sales in the approaching yr. Yet, it said full-year revenue, including retail sales and bank cards, will range from a 2% decline to a 1% gain compared with the previous yr. That forecast features a greater than 1% hit from having one less week within the fiscal yr.
Nordstrom said it expects earnings per share between $1.65 and $2.05 for the total yr. That might be higher than its most up-to-date fiscal yr, which saw earnings per share of $1.51, the retailer said Tuesday.
Here’s what the department store operator reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly often known as Refinitiv:
- Earnings per share: 96 cents adjusted vs. 88 cents expected
- Revenue: $4.42 billion vs. $4.39 billion expected
Just like other retailers, Nordstrom has felt the squeeze from consumers becoming choosier and more price-conscious while coping with inflation and better rates of interest. It has also struggled with company-specific problems, akin to lagging sales at its off-price retailer, Nordstrom Rack, and an excessive amount of of the incorrect inventory, which led to higher levels of markdowns.
Within the fiscal quarter that ended Feb. 3, Nordstrom’s quarterly revenue rose about 2% from $4.32 billion within the year-ago period. It attributed roughly $190 million of those sales to having an additional week within the fiscal yr.
Nordstrom’s net income rose to $134 million, or 82 cents per share, from $119 million, or 74 cents per share, a yr earlier. Excluding a charge related to relocating the corporate’s success center, in addition to other adjustments, earnings per share were 96 cents.
Net sales for the corporate’s namesake banner declined 3% within the fourth quarter compared with the year-ago period. That features a 4.1% lift from the additional week of the fiscal yr.
The corporate’s wind down of its Canadian business took a bite out of sales, causing net sales to drop greater than 3%. The corporate announced a yr ago that it will shut down its stores and online operations in Canada.
Rack results
Nordstrom Rack, the corporate’s off-price brand, was the strongest performer in the vacation quarter. Its net sales rose 14.6%, including a 5.8% boost from the additional week within the yr.Â
Within the fourth quarter, more shoppers visited Nordstrom Rack’s website and made purchases once they did, CEO Erik Nordstrom said on the corporate’s earnings call.
The off-price chain grew, even when taking out the boost from opening latest stores, with the banner’s comparable sales up high single digits, he said.
Nordstrom opened 19 latest Nordstrom Rack stores throughout the fiscal yr, for a complete of 258 stores. Including its 93 flagship Nordstrom locations, the corporate ended the yr with 359 total stores, just another than it had at the top of the year-ago period.
The retailer plans to open 22 latest Nordstrom Rack stores in 2024.
On the earnings call, Erik Nordstrom said the chain is “a growth engine for our company” and Nordstrom’s “largest source of latest customer acquisition.”
He said roughly 1 / 4 of retained Rack customers migrate to the Nordstrom banner inside 4 years.
The corporate didn’t announce plans to open latest stores under its flagship banner, but Erik Nordstrom said those stores are a serious a part of the corporate’s business.
“A few of our fastest-growing stores this past yr were our big urban flagship stores,” he said. “Specifically, Latest York has shown real strong growth.”
Shopping trends
Women’s apparel, beauty and the energetic category had the strongest growth yr over yr within the fourth quarter. Some popular purchases included athletic shoes from On Running and Hoka, and apparel from Vuori, Erik Nordstrom said. Shoppers also bought fragrances and apparel from fashion-forward brands akin to Vince and Cinq a Sept throughout the holiday quarter, he said.
Online sales dropped 1.7% within the fourth quarter compared with the year-ago period. E-commerce represented 38% of total sales throughout the quarter, down from 40% in the identical period a yr earlier, and 36% for the fiscal yr, down from 38% in fiscal 2022.Â
Store traffic “continues to be on the soft side,” though traffic at Nordstrom stores improved sequentially all year long, Erik Nordstrom said on the earnings call. He said website traffic stays soft, too. Yet, he said average order value goes up each online and in stores.
Inventory at the top of the quarter was down 2.7% compared with the year-ago period. The corporate entered the vacation quarter with less inventory, too, which led to fewer markdowns and more energizing merchandise, Erik Nordstrom said.
In the approaching yr, he said the retailer will concentrate on driving sales growth at its namesake banner, operating more efficiently and constructing on momentum at Nordstrom Rack.
In April, it can launch a web-based marketplace on Nordstrom’s website to expand its merchandise assortment with inventory that is owned and sold by third-party vendors. Marketplaces are inclined to be more profitable for retailers, for the reason that company doesn’t tackle the chance of shopping for inventory that customers may not like and get stuck with marking it down.
Nordstrom can even personalize the web experience for shoppers to direct them to items that they could like, he said. Online and in stores, beauty will play a outstanding role in driving sales growth, he said.
As of Tuesday’s close, Nordstrom shares are up about 6% over the past yr. That has underperformed the roughly 25% gains of the S&P 500. Nordstrom’s stock closed Tuesday at $20.90, bringing the corporate’s market value to about $3.4 billion.
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