For the nine-week holiday period ended December 31, Nordstrom sales decreased 3.5% versus the nine weeks ended January 1, 2022, the company reported as part of a business update.
The company noted that it took additional markdowns in order to finish the year in a healthy and current inventory position. It expects year-end inventory levels to be down by a double-digit percentage compared with last year and roughly at 2019 levels.
Based on holiday results, Nordstrom has updated its fiscal 2022 outlook to include the following:
- Revenue growth, including retail sales and credit card revenues, at the low end of its previously issued guidance of 5% to 7%.
- Earnings before interest and taxes margin, as a percent of sales, of 2.8% to 3.1% compared with its prior outlook of 4.1% to 4.4%, reflecting lower than expected gross margin as the company introduced markdowns to finish 2022 in a healthy inventory position.
- The SG&A expense reflecting progress on supply chain optimization initiatives and ongoing expense discipline.
- Adjusted EBIT margin of 3.1% to 3.3% compared with a prior outlook of 4.3% to 4.7%.
- An income tax rate in-line with its previously issued outlook of about 27%.
- Earnings per diluted share, excluding the impact of any share repurchase activity, of $1.33 to $1.53, compared with a prior outlook of $2.13 to $2.43.
- Adjusted EPS, excluding the impact of share repurchase activity, if any, of $1.50 to $1.70 as compared with its prior outlook of $2.30 to $2.60.
- A leverage ratio slightly above three times by year-end as compared with its prior outlook of below 2.9 times.
- Nordstrom plans to report its fourth quarter and full-year 2022 financial results after the close of financial markets on March 2. It will provide additional detail on financial performance and the 2023 outlook at that time.
“The holiday season was highly promotional, and sales were softer than pre-pandemic levels,” said Erik Nordstrom, the company’s CEO, in announcing the financial update. “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. 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.”
Pete Nordstrom, president and chief brand officer of Nordstrom, added, “Having a healthier inventory level and mix positions us well to react quickly to changing consumer demand. 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.”
