Miami, Florida, Coral Gables Shops at Merrick Park, Nordstrom Department Store with a shopper inside.
Jeff Greenberg Universal Image Group | Getty Images
Nordstrom there were reports of lower sales and profits for the holiday season, although earnings topped Wall Street expectations.
The company said it expects sales to decline in the new fiscal year, reflecting in part the decision to wind down its Canadian operations.
“We entered Canada in 2014 with a plan to build and sustain a long-term business there. Despite our best efforts, we do not see a real path to profitability for Canadian businesses,” CEO Erik Nordstrom said in a release on Friday.
Here’s what department stores reported for the fiscal fourth quarter compared to what analysts anticipated, 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 prominent activist investors. Net income in the period ended Jan. 28 fell to $119 million, or 74 cents per share, from $200 million, or $1.23 per share, a year earlier.
For the new fiscal year, Nordstrom expects revenue to decline 4% to 6%. It also projected EPS of 20 cents to 80 cents for the year.
Michael Maher, interim chief financial officer, said Nordstrom is taking into account a more challenging economic backdrop and higher costs in next year’s forecast.
“We expect that high inflation and rising interest rates will continue to weigh on consumer spending, especially in the first half of the year,” he said in a call with investors. “We also expect continued inflationary pressures on costs especially labor and transportation costs.”
He said the outlook includes a negative impact of about 2.5 percent from the decline in operations in Canada, a business that generates sales of about $400 million in fiscal year 2022.
On January 28, the company said it has six Nordstrom stores and seven Nordstrom Rack stores in Canada. Nordstrom said it was shutting down its Canadian e-commerce platform on Thursday. They expect to close their Canadian store in Canada by the end of June.
Even before Nordstrom reported earnings, it cut its forecast and told investors it was in for a tough holiday. In January, the department store chain said net sales fell 3.5% for the nine-week period ended December 31 compared to the year-ago period. Its net sales were down sharply during its price run at the price banner, Nordstrom Rack.
One of the reasons for disappointing sales? More markdowns. Nordstrom said it discounted merchandise more than expected in November and December, so it could start the fiscal year with a healthy level of inventory.
The company gained attention and saw its stock rise in February, as activist investor Ryan Cohen bought a large stake in the company. Cohen, chairman of the GameStop and founder of chewyinterested in using their position to push for change – including taking the former Bed Bath & Beyond CEO Mark Tritton dies from Nordstrom’s board.
Cohen bought, and later sold, a major stake in Bed Bath, after criticizing Tritton’s strategy and pushing for changes at the company.
By Thursday’s close, Nordstrom shares were up more than 19% this year.
Read Nordstrom’s full earnings release.
