Nordstrom Inc., impacted by steeper markdowns and macroeconomic headwinds, reported fourth-quarter declines on the both the top and bottom lines and announced that it was pulling out of Canada.
Fourth-quarter net earnings declined to $119 million, or $0.74 a diluted share, from $200 million in the year-ago quarter.
Net sales in the quarter dipped 4.1 percent to $4.2 billion from $4.38 billion in the year-ago period.
“We took decisive actions to right-size our inventory as we entered the new year, positioning us for greater agility amidst continuing macroeconomic uncertainty. We also made the difficult decision to wind down operations in our Canadian business. This will enable us to simplify our operations and further increase our focus on driving long-term profitable growth in our core U.S. business,” chief executive officer Erik Nordstrom said in a statement.
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The Nordstrom division overall saw a 2.4 percent dip in sales last quarter, while the Nordstrom Rack saw sales decline 8.1 percent compared to the year-ago period.
Digital sales decreased 13.1 percent from the fourth quarter a year ago.
“As we enter fiscal 2023, we are focused on enhancing the customer experience, improving Nordstrom Rack performance, increasing inventory productivity and continuing to advance our supply chain optimization initiatives,” Nordstrom said. “We remain confident in the strength of our brands and our ability to drive profitable growth and deliver long-term value to our shareholders.”
Pete Nordstrom, president and chief brand officer, added, “While the incremental markdowns in the second half impacted our margins, we are better positioned for a stronger 2023. Our actions have given us increased flexibility to react more quickly to changing customer demand and provide the newness and fashion customers love.” Inventories are down 15 percent from last year and comparable to 2019 levels.
Addressing the shutdown of all of Nordstrom’s stores in Canada, Erik Nordstrom said, “We regularly review every aspect of our business to make sure that we are set up for success. We entered Canada in 2014 with a plan to build and sustain a long-term business there. Despite our best efforts, we do not see a realistic path to profitability for the Canadian business.”
Nordstrom commenced a wind-down of its Canada stores, both Nordstrom and Rack, and its e-commerce operations there, and will be assisted by a liquidator. E-commerce has already ceased operating and the wind down of the stores is expected to be completed by June this year.
The wind-down will result in a loss of approximately $400 million in sales, and a $35 million improvement in earnings before interest and taxes this year, excluding the $300 million to $350 million in charges this quarter expected from closing the Canadian operations. Nordstrom operates six department stores and seven Rack stores in Canada.
For all of 2022, Nordstrom reported nearly $15.1 billion in sales, compared to $14.4 billion in 2021. Net earnings inn 2022 came to $245 million versus $178 million in 2021.
For 2023, Nordstrom expects revenue to decline 4 to 6 percent and earnings per share of $0.20 to $0.80.
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