Dive Brief:
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Nordstrom Q4 net sales fell just over 2% year over year to $4.2 billion. But accounting for last year’s extra week, they rose 2.5%, and store comps were up 4.7%. By banner, over a comparable time period: Q4 full-line net sales rose 0.5%, with comps up 5.3%, and off-price Rack net sales rose 6.6%, with comps up 3.5%.
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Gross margin expanded by 290 basis points, thanks mostly to less shrink, lower promotions and merchandise margin improvements related to switching from the retail inventory method to cost accounting. Net earnings surged more than 23% to $165 million.
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Chief Financial Officer Cathy Smith, who arrived two years ago and oversaw Nordstrom’s move away from the retail inventory method, will step down after Nordstrom files its annual report. The search for her replacement has begun. Smith will become Starbucks CFO some time next month, the coffee chain said Tuesday.
Dive Insight:
In addition to its Q4 and full-year results, Nordstrom’s financial filings Tuesday included preliminary information for shareholders, who in coming weeks will vote on whether to take the company private.
Its board of directors in December unanimously approved the deal, which will entail an all-cash transaction valued at about $6.25 billion. If approved, members of the Nordstrom family group plus Mexican retail conglomerate El Puerto de Liverpool will acquire all the outstanding common shares they don’t already own. The transaction minimally impacts Nordstrom's credit situation because it requires little new debt, according to Fitch Ratings Senior Director David Silverman.
The robust holiday results across both the full-line and off-price fleets stem from Nordstrom’s work to “revitalize both businesses through merchandise introductions and service improvements, including omnichannel innovations,” Silverman said in emailed comments Tuesday.
"Nordstrom reported a good 4Q as it prepares for its buyout by the Nordstrom family and Mexican department store operator Liverpool,” Silverman said. “Fitch expects the company can produce relatively stable results in the medium term given its unique positioning in the department store space, including its exposure to better malls and higher end consumers, its good omnichannel model, and presence in the growing off-price channel."
The company plans to open another 21 Rack locations this year, after opening 23 in 2024, per its release Tuesday. At the end of the year, it was running 92 full-line Nordstrom stores and 277 Racks.
