Digital sales continue to be the lead driver for Nordstrom — and many of its peers — as the company navigates a pandemic-plagued retail landscape.
The department store this afternoon posted fourth-quarter results that showed the strain its business faced amid the global health crisis as well as its ability to shift resources to digital and propel that area to represent 54% of overall sales in a matter of months. (That’s compared to 35% of total sales in the same period last year.) All told, the e-commerce channel saw sales growth of 24% in Q4.
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Overall, Nordstrom said its Q4 earnings tumbled 83% year over year to $33 million, or 21 cents per share, but significantly bested analysts forecasts for EPS of 14 cents. Sales, meanwhile, fell 20% to $3.55 billion, roughly in line with market watchers’ bets of $3.6 billion. The company also noted that revenues for the period “improved sequentially” by 600 basis points relative to the third quarter, after adjusting for a shift of the Nordstrom Anniversary Sale.
“We’re proud of our team’s efforts to generate another quarter of improved sales trends and positive operating cash flow in what remains an uncertain environment. Heading into 2021, we’re taking steps to improve our inventory position,” said CEO Erik Nordstrom. “Over the quarter, we successfully scaled capabilities across both of our powerful brands — Nordstrom and Nordstrom Rack. As we execute our long-term growth strategy to get closer to our customers than ever before, we’re confident in our ability to unlock the full potential of our digital-first platform to gain market share and drive profitable growth.”
Nevertheless, shares for Nordstrom dipped following the results. As of 4:35 p.m. ET, the stock was in the red 1.8% to $36.90 in after-hours trading. It had ended the day down 1% to $37.58.
For the full year, Nordstrom’s revenue declined 31% to $10.4 billion and the company posted a net loss of $690 million compared to earnings of $496 million in the year prior.
Early last month, during its 2021 virtual investor presentation, Nordstrom unveiled a new business strategy, dubbed Closer to You, which sees the department store employ key learnings from COVID-19, including heightened focus on digital and its off-price business.
Nordstrom’s chief executive said at the time that the company’s strategy boils down to a focus on three areas: extending the rollout of its market strategy to its 20 top markets that represent 75% of sales and integrating Nordstrom Rack assets; broadening the reach of Nordstrom Rack by expanding its price range and better connecting physical and digital inventory helping to boost its incremental revenues to $2 billion over the long-term; and increasing the “digital velocity” of Nordstrom Inc.’s overall business.
What’s more, the company expects to reach $17 billion in sales over the medium term; expand profit margin with the potential to sustain 6% or higher EBIT margin going forward; a “significant improvement” in ROIC; and consistently generate more than one $1 billion in operating cash flow annually.
Today, the company restated its 2021 financial outlook, which it revealed during the presentation last month, calling for revenue, including retail sales and credit card revenues, to grow more than 25%, with digital representing 50% of total sales. It also noted that the outlook assumes that its stores will stay open during the year.