Nordstrom, impacted by steeper markdowns and macroeconomic headwinds, reported Q4 declines on the both the top and bottom lines and announced that it was pulling out of Canada. Net earnings declined to $119mn from $200mn in the year-ago quarter. Net sales in the quarter dipped 4.1% to $4.2bn from $4.38bn in the year-ago period. However, sales and earnings were in line with their updated fiscal 2022 outlook. The Nordstrom division overall saw a 2.4% dip in sales Q4, while the Nordstrom Rack saw sales decline 8.1% compared to the year-ago period. Digital sales decreased 13.1% from Q4 a year ago. Inventories are down 15% from last year and comparable to 2019 levels.
Bestselling categories last quarter at Nordstrom were dressier men’s wear, outerwear, sweaters and boots, and at Rack, beauty did well. Nordstrom remain bullish on Nordstrom Rack, despite its issues, and sees room to grow the off-price business with more stores, with several new ones planned this year, and by remaking Rack’s product mix by prioritizing 50 strategic, very productive brands that are well-known and loved across the U.S. These include many brands curated for the Nordstrom (full-price) banner. 90% of the top 50 brands at Nordstrom are also carried at Nordstrom Rack. Rack should have a strong assortment in place by mid-2023.
Nordstrom has commenced a wind-down of its Canada stores, both Nordstrom and Rack, and its e-commerce operations there, and will be assisted by a liquidator. E-commerce has already ceased operating and the wind down of the stores is expected to be completed by June this year. Nordstrom entered Canada in 2014 with a plan to build and sustain a long-term business there but do not see now a realistic path to profitability for its six Canadian Nordstrom and seven Rack stores. The wind-down will result in a loss of approximately $400mn in sales, and a $35mn improvement in EBIT this year, excluding the $300mn to $350mn in charges this quarter expected from closing the Canadian operations.