Nordstrom Inc. on Thursday reported mixed fourth quarter results in which it topped Wall Street’s earnings per share consensus estimate by 6 cents, but just missed the mark on revenues.
In a Nutshell: The quarterly profit was better than expected, thanks to sales at its off-price business. The company said it has been focusing on three strategic pillars: providing a compelling product offering, delivering outstanding services and experiences, and leveraging the strength of the Nordstrom brand. It said about 10 million shoppers, or one-third of its total customer base, shopped across multiple channels, which led to higher spend.
The retailer said one of its achievements was the launch of its local market strategy, “which drove outsized market share gains in Los Angeles and increased product selection, delivery speed and convenience for customers.”
The company said it plans to open two new full-line stores in the fall, one in Manhattan and the other in Norwalk, Conn. It also plans to open five new Nordstrom Rack stores this year. Last month the retailer said it would shutter two full-price stores.
For the most part, investors liked the 6-cent beat on EPS and sent shares of Nordstrom up 2.9 percent to $48.65 in early after-hours trading. Nordstrom reported financial results after the Big Board closed its trading session for the day.
Sales: Total revenues slipped 4.6 percent to $4.48 billion from $4.70 billion last year, which included a decline of 4.7 percent in net sales to $4.38 billion from $4.60 billion. By business segment, sales at full-price stores fell 8.8 percent to $2.99 billion, and were down 2.7 percent to $1.40 billion at its off-price Nordstrom Rack stores. The company said digital sales, which rose 16 percent, represented one-third of total net sales.
Comparable sales rose 0.1 percent. At full price stores, comparable sales decreased 1.6 percent, but rose 4 percent at its Nordstrom Rack stores.
The full-price segment includes its Nordstrom stores, nordstrom.com, its Canadian operation, Trunk Club, Jeffrey and Nordstrom Local businesses. The off-price segment includes Nordstrom Rack stores in the U.S., Nordstromrack.com/HauteLook and Last Chance clearance stores. The retailer also noted that Trunk Club delivered sales growth of 35 percent, while Nordstromrack.com/HauteLook “exceeded $1 billion in sales.”
The company said gross profit, as a percentage of net sales, was 35.1 percent. That represented a decline of 33 basis points versus the year-ago quarter due to higher markdowns in response to softer sales trends at its full-price stores and an elevated promotional environment in the quarter.
Earnings: Net income rose 64.2 percent to $248 million, or $1.48 a diluted share, from $151 million, or 89 cents, a year ago.
Wall Street’s consensus estimate for EPS was $1.42 on revenues of $4.6 billion.
The company emphasized that it maintained a strong financial position during 2018, noting that it has generated annual operating cash flow in excess of $1 billion for 10 consecutive years, and that returned $1 billion to shareholders in fiscal 2018.
For fiscal 2019, the company guided EPS at between $3.65 to $3.90, on a net sales growth of 1 percent to 2 percent. Nordstrom said it plans to report results for the first quarter ending May 4 on May 21.