Nordstrom, Inc. reported total company net sales in the fourth quarter increased 2.2 percent to $4.29 billion, inclusive of 460 basis points related to the 53rd week, compared with the corresponding period in fiscal 2022. 

The wind-down of its Canadian operations hurt the company’s total fourth-quarter net sales by 250 basis points. GMV increased 2.0 percent in the fourth quarter and decreased 6.1 percent in fiscal 2023 when compared with the corresponding periods in 2022.

  • Nordstrom banner net sales in the fourth quarter decreased 3.0 percent to $2.87 billion, including 410 basis points related to the 53rd week, compared with the fiscal 2022 fourth quarter, improving sequentially from the third quarter. The wind-down of Canadian operations negatively impacted Nordstrom banner’s fourth quarter net sales of 355 basis points. GMV decreased 3.4 percent in the fourth quarter and decreased 8.5 percent in fiscal 2023 when compared with the corresponding periods in 2022.
  • Nordstrom Rack banner net sales in the 2023 fourth quarter increased 14.6 percent to $1.43 billion, inclusive of 580 basis points related to the 53rd week, compared with the same period in fiscal 2022, improving sequentially from the third quarter.
  • Digital Sales in the 2023 fourth quarter decreased 1.7 percent compared with the corresponding period in fiscal 2022. Digital sales represented 38 percent of total sales during the quarter and 36 percent of sales for the fiscal year.

Full-year revenue for fiscal 2023, including retail sales and credit card revenues, decreased 5.4 percent to $14.22 billion.

In the fourth quarter, active, beauty, and women’s apparel had the strongest growth compared to 2022. For fiscal 2023, active and beauty had the strongest growth versus 2022.

“We delivered on our 2023 guidance and are confident in our expectations for continued sales improvement and sustained profitability in 2024,” said Erik Nordstrom, CEO of Nordstrom, Inc. “We’re laser-focused on efforts we know will drive growth and profitability across the business over the next few years, including new Rack store openings, Nordstrom digital growth and increasing comp store sales. We have a strong team dedicated to building on our heritage of service, and we look forward to helping our customers feel good and look their best in the year ahead.”

Gross margin was 34.4 percent of net sales in Q4, up 125 basis points compared with Q4 fiscal 2022 due to lower markdowns, lower buying and occupancy costs and leverage on higher sales.

SG&A expenses, as a percentage of net sales, were 32.4 percent, increasing 85 basis points compared with the corresponding period in fiscal 2022, said to be primarily due to higher labor costs and a supply chain asset impairment charge, partially offset by improvements in variable costs from supply chain efficiencies and leverage on higher sales. 

Excluding the $32 million supply chain asset impairment and related charge, adjusted SG&A expenses, as a percentage of net sales, were 31.6 percent for the fourth quarter.

EBIT was $215 million in the fourth quarter of 2023, compared with $187 million during the corresponding period in fiscal 2022. EBIT margin and adjusted EBIT margin for the quarter were 5.0 percent and 5.7 percent of sales, respectively.

Adjusted EBIT was $247 million for the fourth quarter of 2023, excluding a supply chain asset impairment charge.

Fiscal 2023 EBIT was $251 million. Adjusted EBIT of $567 million excluding charges related to the wind-down of Canadian operations reported in the first and third quarters and a supply chain asset impairment charge in the fourth quarter.

EBIT margin and adjusted EBIT margin for the fiscal year were 1.8 percent and 4.0 percent, respectively.

Interest expense, net, of $26 million decreased from $27 million during the same period in fiscal 2022.

Income tax expense during the fourth quarter was $55 million, or 29.1 percent of pretax earnings, compared with $41 million, or 25.2 percent of pretax earnings, in the Q4 period of fiscal 2022. The increase was primarily due to unfavorable provision-to-return adjustments recorded in the fourth quarter of 2023, compared with the corresponding quarter in fiscal 2022.

The full-year income tax rate was 8.6 percent. Excluding a 1,640 basis point combined favorable impact from the one-time Canada charges and the supply chain asset impairment charge, the full-year income tax rate would be 25.0 percent.

Net income was $134 million, or 82 cents per diluted share, in the fourth quarter, compared to net income of $119 million, or 74 cents per diluted share, in the prior year fourth quarter.

Balance Sheet
The company ended the year with $1.4 billion in available liquidity, including $628 million in cash. Ending inventory decreased 2.7 percent to $1.89 billion compared with the same period in fiscal 2022 versus a 2.2 percent increase in sales.

Outlook
Nordstrom, Inc. expects fiscal 2024 to be a year of continued momentum in its growth and profitability drivers, including opening new Rack stores, growing Nordstrom banner digital sales and driving comparable store sales across both banners. As such, the company provided the following financial outlook for fiscal 2024:

  • Revenue range, including retail sales and credit card revenues, of 2.0 percent decline to 1.0 percent growth versus the 53-week fiscal 2023, which includes an approximately 135 basis point unfavorable impact from the 53rd week;
  • Comparable sales range of 1.0 percent decline to 2.0 percent growth versus 52 weeks in fiscal 20233;
  • EBIT margin of 3.5 to 4.0 percent of sales;
  • Income tax rate of approximately 27 percent; and
  • EPS of $1.65 to $2.05, excluding the impact of share repurchase activity, if any.

The 53rd week in fiscal 2023 creates a timing shift in the 4-5-4 calendar for fiscal 2024 that is expected to impact comparisons to the prior year.

Image courtesy Nordstrom, Inc.