8-K: Nordstrom Reports Strong Fourth Quarter 2024 Earnings, Revenue and Comparable Sales Exceed Expectations

Nordstrom's fourth quarter 2024 results show revenue, comparable sales, and earnings at or above the high end of the fiscal year outlook, with comparable sales up 4.7 percent.

Summary

• Nordstrom reported fourth quarter net earnings of $165 million, or $0.97 per diluted share.
• Earnings before interest and taxes (EBIT) were $242 million.
• Adjusted EBIT was $273 million and adjusted EPS was $1.10, excluding privatization fees and an accelerated technology depreciation charge.
• For fiscal year 2024, net earnings were $294 million and EPS was $1.74, with EBIT of $495 million, or 3.4 percent of sales.
• Adjusted EBIT for fiscal 2024 was $593 million, or 4.1 percent of sales, and adjusted EPS was $2.17, excluding certain charges.
• Total Company net sales decreased 2.1 percent in the fourth quarter, but increased 2.5 percent excluding the 53rd week in fiscal 2023.
• Total Company comparable sales increased 4.7 percent.
• Nordstrom banner net sales decreased 3.7 percent, while Nordstrom Rack net sales increased 1.2 percent.
• Digital sales decreased 1.8 percent and represented 38 percent of total sales during the quarter.
• The company ended the year with $1.8 billion in available liquidity, including $1.0 billion in cash.

Sentiment

Score: 7

Explanation: The sentiment is positive due to strong earnings, comparable sales growth, and a pending acquisition. However, there are some concerns about declining net sales and the departure of the CFO.

Positives

• Comparable sales increased 4.7 percent in the fourth quarter.
• Gross profit margin improved by 290 basis points.
• The company has $1.8 billion in available liquidity.
• Full-year revenue increased 2.2 percent, or 3.6 percent excluding the 53rd week.
• The company opened 23 new Nordstrom Rack stores during fiscal year 2024.

Negatives

• Total Company net sales decreased 2.1 percent in the fourth quarter.
• Nordstrom banner net sales decreased 3.7 percent.
• Digital sales decreased 1.8 percent in the fourth quarter.
• Ending inventory increased 11.4 percent compared to a net sales decrease of 2.1 percent.

Risks

• The pending acquisition is subject to shareholder approval and other conditions.
• The company is searching for a new CFO.
• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations.
• The increase in inventory was driven primarily by growth in the top brands at both banners and higher in-transit inventory late in the quarter.

Future Outlook

Given the pending transaction, the Company is not providing a fiscal 2025 financial outlook or hosting a fourth quarter 2024 conference call.

Management Comments

• Customers responded positively to the strength of our offering across both banners in the fourth quarter, said Erik Nordstrom, chief executive officer of Nordstrom, Inc.
• We maintained the momentum we built throughout the year, which resulted in full-year sales and profitability coming in at the high end of our expectations, said Erik Nordstrom, chief executive officer of Nordstrom, Inc.
• Our team reacted with agility and speed to the holiday environment, responding in real-time to better serve our customers and drive strong financial results, said Pete Nordstrom, president of Nordstrom, Inc.
• We consistently executed on our priorities in 2024 and were grateful to our teams for their hard work to deliver on our purpose of helping customers feel good and look their best, said Pete Nordstrom, president of Nordstrom, Inc.
• We are grateful for Cathys leadership over the past two years, which has been instrumental in strengthening our financial resilience and flexibility while maintaining our focus on providing customers with the best possible experiences, said Erik Nordstrom.
• We wish her well in this next chapter, said Erik Nordstrom.
• We are fortunate to have a strong financial leadership team to take on additional responsibilities and help ensure a smooth transition during our search, said Erik Nordstrom.

Industry Context

Nordstrom's results reflect the ongoing challenges and opportunities in the retail sector, with a focus on adapting to changing consumer preferences and leveraging both physical and digital channels. The pending acquisition suggests a strategic shift in the company's direction.

Comparison to Industry Standards

• Nordstrom's comparable sales increase of 4.7% is a positive sign compared to some other department stores that have struggled with declining sales.
• The company's focus on digital sales, which represent 38% of total sales, aligns with the industry trend of increasing online shopping.
• Nordstrom's adjusted EBIT margin of 4.1% for the year is comparable to other high-end retailers, but lags behind some of the more profitable off-price retailers.
• Comparable companies include Macy's, Kohl's, and Saks Fifth Avenue.

Management Changes

Stakeholder Impact

• Shareholders will receive a quarterly cash dividend of $0.19 per share.
• Employees may experience uncertainty during the CFO transition.
• Customers can expect continued service at Nordstrom and Nordstrom Rack locations.
• Suppliers will likely see continued business relationships with Nordstrom.
• Creditors should be reassured by the company's strong liquidity.

Next Steps

• The company will file its Annual Report on Form 10-K for the fiscal year ended February 1, 2025.
• The company will continue its search for a new CFO.
• The company expects the acquisition by the Nordstrom family and El Puerto de Liverpool, S.A.B de C.V. to close in the first half of 2025.
• The company plans to open several new Nordstrom Rack stores in 2025 and 2026.

Key Dates