Nordstrom reveals fourth-quarter sales miss, Erik Nordstrom named sole CEO
Mar 4, 2020
Nordstrom Inc forecast a 2020 profit largely below market expectations on Tuesday, after the upscale apparel retailer missed estimates for fourth-quarter revenue, sending its shares down nearly 8% in after-market trading.
The company also said on Tuesday that Erik Nordstrom would be its sole chief executive officer, as it moves away from its co-president structure.
The Seattle-based company, like other brick-and-mortar retailers, has been struggling to retain market share at a time of intense competition from online players like Amazon.com Inc and discount retailers like TJX Cos Inc’s Marshalls and T.J. Maxx chains.
On a post-earnings conference call Tuesday, executives underscored the retailer’s investments in its loyalty programs, better-managing inventory and offering a more attractive product assortment to reassure investors that it is on the right track.
Nordstrom expects to earn $3.25 to $3.50 per share in fiscal 2020, compared with analysts’ estimates of $3.49 per share, according to IBES data from Refinitiv.
The company said the forecast does not include any impact from the coronavirus outbreak. Department stores are among those that typically rely most on foot traffic and international tourism sales.
On Tuesday, company executives said they are monitoring the coronavirus situation closely and having “a lot of conversations” with their vendors.
Even still, investor sentiment toward the department store sector remains negative on the whole.
“Sadly the numbers weren’t impressive but in line with other department stores,” Sucharita Kodali, retail analyst at Forrester Research, said.
“They (Nordstrom) had been doing better at one point years ago but as off price has stabilized and their web sales haven’t kept pace with the industry. They’ve been challenged to find pockets of growth.”
Kodali also said “the fact that their guidance is optimistic and didn’t take coronavirus into account is cause for concern.”
In a bid to attract new customers and hold onto existing ones, the retailer has been rolling out concept stores such as “Nordstrom Local,” which holds no stock and serves as pickup points for online orders and returns, while also providing personal styling and tailoring options.
It opened a New York City flagship store last year with a suite of services with cafes, a donut shop, fine-dining restaurants and a full bar at the center of its women’s shoe floor. In June, Nordstrom entered into a partnership with clothing rental firm, Rent the Runway, and in January, it launched a resale shop.
Net earnings fell to $193 million, or $1.23 per share, in the three months ended Feb. 1, from $248 million, or $1.48 per share, a year earlier.
Excluding items, Nordstrom earned $1.42 per share, missing Wall Street expectations of $1.47, hit by higher costs from growth of its loyalty program and occupancy costs related to the NYC flagship store.
The reported quarter included a 19 cents per share charge related to the integration of Trunk Club stores and debt refinancing costs.
Total revenue rose to $4.54 billion from $4.48 billion, but fell short of estimates of $4.56 billion.
Earlier on Tuesday, Kohl’s Corp beat tempered expectations for holiday-quarter profit, while Target Corp forecast full-year profit below analysts’ estimates and missed lowered expectations for the reported quarter.
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