Nordstrom, Inc. reported fourth-quarter net income of $119 million, or 74 cents per diluted share, and EBIT of $187 million, or 4.5 percent of sales.
For the fiscal year ended January 28, 2023, net income was $245 million and diluted EPS was $1.51, with EBIT of $465 million, or 3.1% of sales. Adjusted EBIT was $502 million, or 3.3 percent of sales, and adjusted EPS was $1.69 for fiscal 2022.
As part of its initiatives to drive long-term profitable growth and increase shareholder value, Nordstrom also announced that it has decided to stop supporting Nordstrom Canada’s business operations.
“As we enter the new year, we have taken decisive action to bring our stocks up to size, allowing us greater flexibility in the face of continued macroeconomic uncertainty. We have also made the difficult decision to close our Canadian business. This will enable us to simplify our operations and we are even more focused on driving long-term profitable growth in our core US business,” said Erik Nordstrom, CEO of Nordstrom, Inc.
An overview of Nordstrom’s fourth-quarter and full-year results
Fourth-quarter net sales fell 4.1 percent, and gross merchandise value (GMV) fell 4.2 percent. Nordstrom’s net sales were down 2.4 percent and GMV was down 2.5 percent, while Nordstrom Rack’s net sales were down 8.1 percent.
Revenue for fiscal year 2022, including retail and credit card revenue, grew 5 percent, while GMV also grew 5 percent. Nordstrom’s GMV banner posted an increase of 6.9 percent in the fiscal year.
The company’s fourth-quarter digital sales fell 13.1 percent compared to the same period in fiscal 2021.
The elimination of Nordstrom Rack’s in-store digital order fulfillment in Q3 and the termination of Trunk Club earlier in fiscal 2022 negatively impacted Q4 digital sales by approximately 500 basis points. Digital sales accounted for 40 percent of total sales in the quarter and 38 percent of sales in the fiscal year.
Gross profit as a percentage of net sales, at 33.2 percent, was down 525 basis points from the same period in fiscal 2021.
“While rising second-half markdowns affected our margins, we are better prepared for a better year 2023. Our actions have given us more flexibility to respond more quickly to changing customer demand and provide the news and fashion our customers love,” added Pete Nordstrom, President and Chief Brand Officer, Nordstrom, Inc.
As previously announced, on February 28, 2023, the management announced a quarterly cash dividend of 19 cents per share, which will be paid to registered shareholders at the end of March 14, 2023, payable on March 29, 2023.
Nordstrom liquidates operations in Canada
Nordstrom Canada has begun liquidating its business, today obtaining a preliminary ruling from the Supreme Court of Ontario under the Corporate Creditors Arrangements Act (CCAA) to facilitate liquidation in an orderly manner.
“We entered Canada in 2014 with a plan to build and maintain a long-term business there. Despite our best efforts, we do not see a realistic path to profitability for a Canadian business. This decision will simplify our structure, intensify our focus on our growth and profitability goals, and position us to create more value for our shareholders,” said Erik Nordstrom.
Nordstrom Canada intends to liquidate its Nordstrom and Nordstrom Rack stores across Canada with the help of a third-party liquidator and Canadian e-commerce platform. The e-commerce platform will cease operations on March 2, 2023. The liquidation of stores is expected to be completed by the end of June 2023.
The company said the liquidation is expected to result in a decrease in total net sales of approximately $400 million and an improvement in EBIT of $35 million in fiscal year 2023 over fiscal year 2022, excluding liquidation related fees.
Nordstrom Canada operates six Nordstrom stores and seven Nordstrom Rack stores, as well as the Nordstrom.ca website, and employs approximately 2,500 people.
Nordstrom expects revenue to decline in 2023
The company expects revenue, including retail and credit card revenue, to fall 4 to 6 percent in fiscal 2023 compared to fiscal 2022, including approximately 250 basis points negative impact of liquidation in Canada and approximately 130 points underlying positive impact from week 53.
The EBIT margin is expected to be between 1.2 and 2.1 percent of sales, the adjusted EBIT margin between 3.7 and 4.2 percent of sales, the EPS between 20 and 80 cents and the adjusted EPS between $1.80 and $2.20.