Nordstrom, Inc. (NYSE:JWN) has reported a 3.5% decline in net sales for the nine-week holiday period ended December 31, 2022, as it responded to the weak retail environment with markdowns.
The department store chain has now guided investors for fiscal 2022 revenue growth, including retail sales and credit card revenues, at the lower end of its previously issued outlook of 5% to 7%.
"The holiday season was highly promotional, and sales were softer than pre-pandemic levels. While we continue to see greater resilience in our higher income cohorts, it is clear that consumers are being more selective with their spending given the broader macro environment,” Nordstrom CEO Erik Nordstrom said in a statement. ”Still, our team executed well, and we enter 2023 in a stronger position as we prioritized starting the new fiscal year with clean inventory levels, even if this required more markdowns than planned."
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The retailer has also lowered its adjusted EBIT (earnings before interest and tax) margin to between 3.1% and 3.3% compared to its prior outlook of 4.3% to 4.7%. Adjusted earnings per share are likely to be between $1.50 and $1.70, down from previous guidance of $2.30 to $2.60, it said.
Nordstrom said it took additional markdowns in order to finish the year in a healthy and current inventory position. It expects year-end inventory levels to be down by a double-digit percentage compared with 2021, and roughly at 2019 levels.
"Having a healthier inventory level and mix positions us well to react quickly to changing consumer demand," Nordstrom president and chief brand officer Pete Nordstrom added. "Given the continued uncertain environment, we remain focused on executing with flexibility and agility, including conservative buy plans and faster inventory turns. We continue to enhance our customer experience with our Closer to You strategy, which links our digital and physical assets. Additionally, we are further optimizing our supply chain to improve the customer experience and expense efficiency, and we expect these initiatives will continue to deliver significant benefits in 2023.”
The company is scheduled to report its fourth quarter and full-year 2022 financial results after the market close on March 2.
After declining as much as 7% in premarket trading, Nordstrom’s shares were up 2.3% at $17.36 at 10:30am in New York.
Contact the author at stephen.gunnion@proactiveinvestors.com