Nordstrom on Thursday registered lower sales and profits for the holiday quarter. However, the earnings exceeded the expectations of Wall Street, as per the media reports. Erik Nordstrom, Chief Executive Officer (CEO) of Nordstrom, said in a press release that the business took decisive actions to right-size its inventory as it entered the new year. He added that the decisions position Nordstrom for greater agility amid the continuing macroeconomic uncertainty. The CEO added that Nordstrom has also made the difficult decision to wind down operations in its Canadian business, which the firm anticipates will partly be responsible for a decline in sales in the new fiscal year. According to Erik Nordstrom, the move will allow the company to simplify its operations and further direct its focus on driving long-term profitable growth in its core US Business.
The CEO said, “We entered Canada in 2014 with a plan to build and sustain a long-term business there.” He went on to add that despite their best efforts, they don’t see a realistic way to profitability for the Canadian business.
Nordstrom has struggled with sluggish sales, more reduction in prices and scrutiny from a prominent activist investor. The net income of the company in the period ended 28 January dropped to $119 million (or 74 cents per share) from $200 million (or $1.23 per share) a year earlier. For the new fiscal year, Erik Nordstrom anticipates revenue to decline by 4 per cent to 6 per cent. He also estimated earnings per share (EPS) of 20 cents to 80 cents for the year.
Erik Nordstrom said on a call with investors that the company anticipates the rising interest rates and elevated inflation are going to continue to weigh on consumer spending, particularly in the first half of the year. He added that they expect continuing inflationary pressure on expenses, especially the transportation and labour costs.
According to him, the outlook included a roughly 2.5-percentage-point negative impact from the wind-down of firm’s operations in Canada. As per the media reports, its operations in Canada drove nearly $400 million in sales in the fiscal 2022.
Erik Nordstrom stated that the company discounted merchandise more than expected in the last November and December, so it could begin the fiscal year with a healthier level of inventory.