Nordstrom impacted by the pandemic and unexpected headwinds, saw fourth-quarter net earnings fall to $33mn, from $193mn in the year-ago period. EBIT were $30mn, or 0.8% of net sales, compared with $299mn, or 6.7% of net sales for the same period in fiscal 2019. Net sales in Q4, which ended on Jan. 30, declined 20% to $3.55bn. Nordstrom forecast that the company’s annual revenue will reach $17bn in the next three to five years, which compares to $10.38bn in sales last year, and $15.13bn in 2019. While Nordstrom said the timing of a recovery of customer demand remains “uncertain,” the company is projecting that fiscal 2021 revenue, including retail sales and credit card revenues, would grow more than 25%, with digital representing about 50% of sales. EBIT margin is expected to be about 3% of sales. The forecast assumes stores remain open during the year.

For all of last year, Nordstrom had a net loss of $690mn, versus reporting a profit of $496mn in 2019. The first quarter of 2020, with the onset of the pandemic, took the biggest toll on profitability. Headwinds impacting the fourth quarter were inventory delays leading to excess levels later in the season, increased markdowns and lower-than-expected merchandise margins; higher supply chain shipping costs, and higher labour and fulfilment costs associated with COVID-19. The company is taking actions to significantly reduce inventory levels in the first quarter 2021 when Rack is seen reaching its desired level, and that the company will be fully repositioned in the second quarter, when the full-line Nordstrom department stores are seen reaching their desired level.

The toughest category just broadly is apparel, particularly men’s apparel. Nordstrom generated fourth-quarter operating cash flow of $88mn, representing the third consecutive quarter of positive cash flow; velocity on digital sales increased, and the active, designer handbags and designer apparel, home, beauty and kids’ categories performed well. Digital represented 54% of total sales in the fourth quarter, compared with 35% for the same period last year. Enabled by Nordstrom’s market strategy to expand merchandise selection by four times on average with faster delivery, the upscale retailer’s top 10 markets continued to outperform the company average by 200 basis points. Nordstrom’s long-term strategy, called ‘Closer to You’, calls for the retailer to broaden its digital assortment; inject lower price offerings into the Nordstrom Rack off-price matrix, and extend the reach of its three-year-old market strategy, from 10 urban areas currently to 20 this year.