Nordstrom Inc., while falling short on earnings for the fourth quarter, saw positive selling trends and increased shopping across channels and said it entered the first quarter of 2018 with “clean inventories.”
The Seattle-based retailer reported that its fourth-quarter net earnings declined to $151 million compared with net earnings of $201 million in the year-ago period. The net included a $42 million charge related to corporate tax reform, and a one-time, non-cash charge of $51 million related to the revaluation of its deferred tax assets, partially offset by cash tax savings from a lower federal tax rate.
Earnings before interest and taxes were $350 million, or 7.6 percent of net sales, compared to EBIT of $424 million, or 10 percent of net sales for the same period in fiscal 2016.
Nordstrom’s results are under scrutiny due to the Nordstrom family’s efforts to find financing to take the company private. On Thursday when the company issued its fourth-quarter and year-end results, there was no update on the privatization plan.
Retail EBIT decreased $93 million compared with the same quarter last year, reflecting investments in capabilities to support growth plans, which would include the building of Nordstrom’s first Manhattan store, a flagship on West 57th Street.
Total sales for the quarter reached $4.6 billion, an 8.4 percent rise from the $4.2 billion in the year-ago period. Comparable sales for the fourth quarter increased 2.6 percent.
In the Nordstrom brand, which includes U.S. and Canada full-line stores, nordstrom.com and Trunk Club, net sales increased 6.4 percent and comparable sales increased 2.4 percent. Across U.S. full-line stores and nordstrom.com, the top-performing merchandise categories were kids and men’s apparel.
At Nordstrom Rack, net sales increased 15 percent and comparable sales increased 3.7 percent.
“We continue to see positive customer trends,” said copresident Blake Nordstrom, during a conference call. “Thirty-three million customers shopped with us. Additionally, nine million shopped in multiple ways. That’s a 6 percent increase. Customers spend 70 percent more when shopping through multiple touch points.” Digital sales represent 30 percent of the company’s full price business, Nordstrom said. He characterized Rack as “our leading source of customer acquisition. We gained 6 million new customers last year.”
Among the growth plans for 2018:
* Nordstrom will open its first freestanding men’s store on April 12. It’s on Broadway between 57th and 58th Streets in Manhattan and is part of a Nordstrom flagship. The main women’s store is scheduled to open in the fall of 2019. “This flagship is our largest project to date,” Nordstrom said. “It’s the biggest and best statement of the Nordstrom brand and a gateway to new customers,” both from New York and internationally.
* Accelerating efforts to growing strategic brand partnerships, such as those with J. Crew and Madewell. According to copresident Erik Nordstrom, “We want more strategic partnerships with brands that are not widely distributed. We do plan to grow this strategic brand business more than the overall company.”
* The rollout of the first six Nordstrom Rack off-price stores in Canada, in Toronto, Calgary, Edmonton and Ottawa areas. Full-line stores and off-price stores combined, Nordstrom sees Canada ultimately accounting for $1 billion in sales.
For all of 2017, Nordstrom’s net earnings rose to $437 million from $354 million a year ago, and EBIT was $926 million, or 6.1 percent of net sales, compared EBIT of $805 million, or 5.6 percent of net sales, for the same period in fiscal 2016.
Sales rose to $15.1 billion for fiscal year 2017, representing a 4.4 percent increase from $14.5 billion in sales in 2016. Nordstrom picked up an extra $220 million in sales from this year having a 53rd week.