Nordstrom isn't about to let a tough fourth quarter and soft outlook for the year deter its long-term objectives.
The Seattle-based specialty chain reported Monday that for the fourth quarter ended Feb. 2, net earnings dropped 8.6 percent to $212 million, or 92 cents a diluted share, from $232 million, or 89 cents, in the corresponding period a year earlier.
Total sales reached $2.5 billion, a 4.4 percent drop from $2.6 billion in last year's fourth quarter. Comp-sales declined 0.7 percent, not too far off the chain's plan for flat sales. The company noted that the fourth quarter of 2006 had 53 weeks compared with the normal 52.
And in one of the strongest indications yet that the tough U.S. economy has begun to impact higher-end retailing, Nordstrom projected a decline of 3 to 5 percent in comp-store sales in the first quarter of 2008 and earnings per share of 49 to 54 cents. For 2008, the company projected earnings per diluted share of $2.75 to $2.90, and flat to negative 2 percent comps.
However, store executives assured Wall Street analysts that despite the numbers, Nordstrom's aggressive program of full-line store openings and elevating assortments with additional designer and upscale merchandise remains intact. They also said they worked hard to reduce bloated inventories last quarter, and feel confident their core customers will continue to purchase at higher rates than the average shopper across the country.
"Our long-term strategy is the right one," Blake Nordstrom, president, said during a conference call after the market closed Monday. "We have confidence we can grow in new markets and add stores in existing markets."
The plan is ambitious — to take the retailer to 140 to 150 stores by 2015, from the current 102.
"There may be current economic issues, but we feel we are well-positioned now and for the future" to get greater market share and share of the customers' wallet, Blake Nordstrom said.
Shares of Nordstrom rose 98 cents, or 2.7 percent, to close at $36.98 on the New York Stock Exchange Monday. Earnings were announced after market close.
But the retailer isn't overlooking the bumpy road ahead in 2008. As Nordstrom said, "In the short term we face challenges in women's apparel [overall] and regionally in California, in particular." He also acknowledged that in the fourth quarter, "We had more markdowns than in previous years." The company overbought in the second half and had to cancel certain orders.
However, Nordstrom and his team believe their core customers, often considered "aspirational," spend twice the rate of the average consumer on apparel. In the last 12 months, premium denim and contemporary trend items had "an excellent year" while the Northwest, South and Midwest were the best regions for the business. Designer merchandise across all categories, as well as accessories and women's shoes, were the best-performing categories.
"Designer is a really growing part of our business. It continues to grow faster than any other category. We will keep investing," said Pete Nordstrom, president of merchandising.
Overall, last year was a roller coaster. "The first half was successful in terms of sales. But we had our share of challenges in the back half," Blake Nordstrom recalled.
For the year, net earnings rose 5.5 percent to $715 million from $678 million, and earnings per share rose to $2.88 from $2.55. There was a $20.9 million gain from the sale of Façonnable.
Comp-store sales rose 3.9 percent — the sixth consecutive year of comp-store growth — and total sales reached $8.8 billion from $8.6 billion. Sales per square foot hit $402.
This year, Nordstrom has set seven full-line store openings, including March 7, in the Ala Moana Center in Honolulu. With 210,000 square feet, it will be the chain's largest opening this year, and first in the state.
Subsequent openings are in Burlington, Mass; Clinton Township, Mich.; Thousand Oaks, Calif.; Indianapolis; Pittsburgh, and Naples, Fla.
Nordstrom is also relocating in Tacoma, Wash., and will open Rack stores in Naperville, Ill. and Laguna Hills, Calif.
The most recent opening was two weeks ago in the Aventura Mall, in south Florida. "It has exceeded our plan to date," Nordstrom said. "New stores are the most productive use of capital available to us."
Renovations are important too, he stressed. "We will continue to invest in remodeling existing stores. We must keep the experience fresh and relevant for our customers." Renovations in the Mall of America and downtown Portland, Ore., stores will lead to increased designer presentations in both units, he said. The plan is to remodel roughly six stores a year.He also said Nordstrom by the second quarter will have "a single view of inventory across full line stores and direct giving us service improvements and efficiencies." He explained that means the different channels will be better equipped to share merchandise information, including the availability of goods and do a better job at meeting customer requests. Nordstrom currently has a $600 million direct business.
In a research note, analyst Jennifer Black of Black & Associates, reported: "We believe that Nordstrom's management is focused on their long-term strategy of providing quality merchandise in a value package through multichannel delivery options. Furthermore, the company has the financial flexibility and cash flow to navigate more volatile economic times with the ability to expand its store base, buy back shares, increase the dividend and invest in technology. Nordstrom is a core holding in a retail portfolio."
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye