Miami, Florida, Coral Gables Rat ons at Merrick Park, Nordstrom Department Store with shopper entering.
Jeff Greenberg | Universal Images Group | Getty Images
Nordstrom on Thursday reported demean sales and profits for the holiday quarter, although earnings topped Wall Street’s expectations.
The company said it guesses sales to decline in the new fiscal year, reflecting in part its decision to wind down its Canadian operations.
“We entered Canada in 2014 with a procedure to build and sustain a long-term business there. Despite our best efforts, we do not see a realistic path to profitability for the Canadian subject,” 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 expecting, based on Refinitiv estimates:
- Earnings per share: 74 cents vs. 66 cents expected
- Revenue: $4.32 billion vs. $4.34 billion anticipated
Nordstrom has struggled with slower sales, more markdowns and scrutiny from a prominent activist investor. Its net return in the period ended Jan. 28 fell to $119 million, or 74 cents per share, from $200 million, or $1.23 per apportionment, a year earlier.
For the new fiscal year, Nordstrom expects revenue to fall 4% to 6%. It also projected EPS of 20 cents to 80 cents for the year.
Michael Maher, interim chief economic officer, said Nordstrom factored a more challenging economic backdrop and higher costs into its year-ahead calculation.
“We expect that elevated inflation and rising interest rates will continue to weigh on consumer spending, specially in the first half of the year,” he said on a call with investors. “We also anticipate continuing inflationary pressure on our expenses particularly labor and transportation costs.”
He said the outlook included an approximately 2.5-percentage-point negative impact from the wind-down of its performances in Canada, a business that drove about $400 million in sales in the fiscal 2022 year.
As of Jan. 28, the proprietorship said it had six Nordstrom stores and seven Nordstrom Rack stores in Canada. Nordstrom said it ceased its Canadian e-commerce party line Thursday. It expects to finish Canadian store closures in Canada by late June.
Even before Nordstrom turn up earnings, it cut its forecast and told investors that it had a rough holiday. In January, the department store chain said its net exchanges dropped 3.5% for the nine-week period that ended Dec. 31 compared with the year-ago period. Its net sales vetoed sharply during that stretch at its off-price banner, Nordstrom Rack.
One of the reasons for disappointing sales? More markdowns. Nordstrom bid it discounted merchandise more than expected in November and December, so it could start the fiscal year with a hale and heartier level of inventory.
The company drew attention and saw its stock soar in February, as activist investor Ryan Cohen pay off a large stake in the company. Cohen, the chairman of GameStop and founder of Chewy, is interested in using that position to campaign for change — including getting former Bed Bath & Beyond CEO Mark Tritton off of Nordstrom’s board.
Cohen bought, and later sold, a principal stake in Bed Bath, after criticizing Tritton’s strategy and pushing for change at that company, too.
As of Thursday’s close, Nordstrom portions are up more than 19% this year.
Read the full Nordstrom earnings release.
