Miami, Florida, Coral Gables Shops in Merrick Park, Nordstrom Department Store with shoppers entering.
Jeff Greenberg | Universal picture group | Getty Images
north current on Thursday reported lower sales and earnings for the holiday quarter, although earnings beat Wall Street expectations.
The company expects sales to decline in the new fiscal year, partly reflecting its decision to exit its Canadian operations.
“We entered Canada in 2014 with a plan to establish and maintain a long-term business there. Despite our best efforts, we do not see a realistic path to profitability for the Canadian business,” CEO Erik Nordstrom said in a press release on Thursday.
Here’s what the department store reported for the fiscal fourth quarter, compared to analysts’ expectations based on Refinitiv Estimates:
- Earnings per share: 74 cents vs. 66 cents expected
- Revenue: $4.32 billion versus $4.34 billion expected
Nordstrom is grappling with slower sales, widening discounts, and scrutiny from a prominent activist investor. Net income for the period ended Jan. 28 fell to $119 million, or 74 cents a share, from $200 million, or $1.23 a share, in the prior year.
For the new fiscal year, Nordstrom expects sales to fall by 4% to 6%. It also projected EPS of 20 cents to 80 cents for the year.
Michael Maher, interim chief financial officer, said Nordstrom factored in a tougher economic environment and higher costs in its full-year guidance.
“We expect that elevated inflation and rising interest rates will continue to weigh on consumer spending, particularly in the first half of the year,” he said when speaking to investors. “We also anticipate continued inflationary pressures on our spending, particularly on labor and transportation costs.”
He said the outlook includes a negative impact of about 2.5 percentage points from the winding-up of its operations in Canada, a business that had revenue of about $400 million in fiscal 2022.
On Jan. 28, the company said it had six Nordstrom stores and seven Nordstrom Rack stores in Canada. Nordstrom said it shut down its Canadian e-commerce platform Thursday. It is expected to complete the Canadian store closures in Canada by the end of June.
Even before Nordstrom announced its earnings, it lowered its guidance and told investors it had had a rough holiday. In January, the department store chain said its net sales fell 3.5% in the nine weeks ended Dec. 31 compared to the same period last year. Net sales for its off-price banner, Nordstrom Rack, fell sharply during this period.
One of the reasons for disappointing sales figures? More discounts. Nordstrom said it discounted goods more than expected in November and December, allowing it to start the fiscal year with healthier inventory.
The company drew attention and saw its shares soar in February when activist investor Ryan Cohen bought a large stake in the company. Cohen, the chairman of GameStop and founder of Toughis keen to use this position to push for change – including becoming a retired bed bath beyond CEO Mark Tritton has resigned from the Nordstrom Board of Directors.
Cohen later bought and sold a large stake in Bed Bath after criticizing Tritton’s strategy and urging change at that company as well.
As of Thursday’s close, Nordstrom shares are up more than 19% this year.
Read Nordstrom’s full earnings announcement.
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