FILE PHOTO: Shoppers clutch their Nordstrom bags at an Old Navy store as holiday shopping accelerates at the King of Prussia Mall
By Ananya Mariam Rajesh
(Reuters) -Nordstrom forecast annual results largely below Wall Street expectations on Tuesday, signaling a slower-than-expected rebound in demand even as consumers see some relief from easing inflationary pressures, sending shares down 10% after the bell.
The company joins Macy’s in signaling weak 2024 sales as retailers brace for another year where spending on non-essential items such as apparel and household equipment is likely to remain pressured.
“We continue to see a cautious consumer that is mindful of discretionary purchases in light of inflation, higher interest rates,” Nordstrom CFO Cathy Smith said.
The company expects 2024 revenue to be between down 2% and up 1%, compared to LSEG estimates of a 0.04% rise.
Nordstrom forecast annual profit per share in a range of $1.65 to $2.05, while analysts had expected $1.98. The company expects first-quarter results to be near break-even to a slight loss.
“The outlook is disappointing … Nordstrom really just hasn’t recovered that well from the pandemic,” Morningstar analyst David Swartz said.
Nordstrom’s fourth-quarter total revenue of $4.42 billion beat estimates of $4.39 billion, mainly driven by strong demand for running shoes and beauty products during the holiday season.
Excluding items, the company earned 96 cents per share, beating estimates of 88 cents, on easing supply costs and lower markdowns.
Sales at Nordstrom’s discount banner Rack rose 14.6%, while the company’s eponymous label recorded a 3% drop in revenue.
“They are not opening any new full-line stores certainly. So it is clear they have got problems there because the competition is just hurting them a lot more than it used to,” Swartz added.
However, Nordstrom has been working to bring in trendier products at its Rack stores and is slated to open 26 new stores this year and in spring 2025 in a bid to attract lower-income consumers.
“We’re going to grow where the market is growing … we’re going to grow with Rack and the off-price channel,” Nordstrom CFO Smith said.
Peer Macy’s on the other hand recently announced plans to focus on its better-performing luxury brands Bloomingdale’s and Bluemercury, which tend to attract higher-earning customers.
Macy’s will open 15 new Bloomingdale’s and 30 new Bluemercury stores over the next three years, CEO Tony Spring said in February.
(Reporting by Ananya Mariam Rajesh in Bengaluru; Additional reporting by Kate Masters; Editing by Shounak Dasgupta)
