Nordstrom Inc. had a tough holiday season with intensified markdowns and lower-than-expected sales, leading the company to lower its outlook for fiscal 2022.
Net sales decreased 3.5 percent for the nine-week holiday period ended Dec. 31, compared with the prior year.
By division, the Nordstrom banner’s net sales decreased 1.7 percent, while net sales at the Nordstrom Rack banner decreased 7.6 percent. On the positive side, Nordstrom executives said inventories are in better shape and healthy.
The stock fell more than 6 percent in after-market trading Thursday, after the forecast was lowered.
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Based on holiday results, the company now forecasts for fiscal 2022 revenue growth, including retail sales and credit card revenues, at the low end of its previously issued outlook of 5 to 7 percent.
Earnings per diluted share, excluding the impact of share repurchase activity, if any, is seen at $1.33 to $1.53, compared with the prior outlook of $2.13 to $2.43.
Earnings before interest and taxes’ margin, as a percent of sales, is seen at 2.8 to 3.1 percent, compared with its prior outlook of 4.1 to 4.4 percent, reflecting lower-than-expected gross margin as the company took additional markdowns to finish the year in a healthy inventory position.
Adjusted EBIT margin is seen at 3.1 to 3.3 percent, compared with the prior outlook of 4.3 to 4.7 percent.
Macy’s Inc. recently indicated that its results would end up toward the low side of its forecasted range, and that the company saw a deeper-than-expected lull in business during December after some big Black Friday and Cyber Monday volume days.
“The holiday season was highly promotional, and sales were softer than pre-pandemic levels. While we continue to see greater resilience in our higher-income cohorts, it is clear that consumers are being more selective with their spending given the broader macro environment,” said Erik Nordstrom, chief executive officer of Nordstrom Inc. “Still, our team executed well, and we enter 2023 in a stronger position as we prioritized starting the new fiscal year with clean inventory levels, even if this required more markdowns than planned.”
The company expects year-end inventory levels to be down by a double-digit percentage compared with last year, and roughly at 2019 levels.
“Having a healthier inventory level and mix positions us well to react quickly to changing consumer demand,” said Pete Nordstrom, president and chief brand officer. “Given the continued uncertain environment, we remain focused on executing with flexibility and agility, including conservative buy plans and faster inventory turns. We continue to enhance our customer experience with our Closer to You strategy, which links our digital and physical assets. Additionally, we are further optimizing our supply chain to improve the customer experience and expense efficiency, and we expect these initiatives will continue to deliver significant benefits in 2023.”
Nordstrom is scheduled to report its fourth quarter and full-year 2022 financial results after the close of the financial markets on March 2.