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."
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews