Upscale department store chain Nordstrom Inc. said Monday fourth-quarter earnings dropped more than two-thirds and forecast double-digit declines in sales and earnings in 2009.
For the three months ended Jan. 31, net income fell 67.9 percent to $68 million, or 31 cents a diluted share, from $212 million, or 92 cents, in the comparable 2007 quarter. The quarterly profit beat analysts’ projections by a penny.
Sales declined 8.5 percent to $2.3 billion from $2.51 billion, and in full-line stores fell 15.8 percent on a comparable-store basis.
Quarterly gross margin receded to 32 percent of sales from 37.6 percent and selling, general and administrative expenses were reduced by $25 million, excluding additional expenses of $58 million from higher reserves for bad debt and new stores.
“This was a challenging year,” president Blake Nordstrom said on an earnings call to Wall Street analysts. “We continue to work on adjusting our mechanize mix to the times. We are not going after a different customer or changing our strategy, but our circumstances have clearly changed over the past year.”
Hurt by a highly promotional holiday season, the Seattle-based chain said it hopes to avoid large clearance events, and is working with vendors to provide the right balance of price, value and quality.
The company said it will discontinue providing quarterly earnings estimates “given the uncertainty surrounding the economic environment.”
The company said it still plans on opening three full-line stores in 2009, and five off-price Nordstrom Rack stores in the spring. In 2010, the retailer said it expects to open three to four stores, down from four to five. But there is still “plenty of headroom to grow the company,” said Erik Nordstrom, executive vice president and president of stores.
The company also said it has seen some “softening” in its credit business, pointing to a rising delinquency rate.
“The worst unemployment trends will continue to put pressure on credit card metrics, and our 2009 plan assumed that unemployment rates exceed 9 percent,” said executive vice president and chief financial officer Mike Koppel.
Koppel said the company is monitoring the credit markets to determine the best time to refinance its short-term borrowing with long-term debt. He added that Nordstrom ended the year with $72 million in cash, compared with $358 million in 2007, and $675 million available in short-term borrowing capacity. The retailer’s next debt maturity is a $350 million securitized note due in April 2010.
The chain projected that earnings in the new year would come in between $1.10 and $1.40 a diluted share, based on a same-store sales decline of 10 to 15 percent and gross margin erosion of another 150 to 250 basis points.
Analysts were looking for earnings of $1.81 cents a share, on sales of $8.28 billion, according to Yahoo Finance.
For the full year, net income slid 43.9 percent to $401 million, or $1.83 a diluted share, as sales contracted 6.3 percent to $8.27 billion.
“While 2009 is likely to be another challenging year, we are focused on the factors in our control and are constantly driving to enhance the customer experience,” Koppel said. He explained that the company’s current financial plan is focused in part on generating positive free cash flow and maintaining a strong balance sheet.
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)