Q4 2024 Earnings Summary
Reported on Mar 5, 2024 (After Market Close)
Pre-Earnings Price$20.90Last close (Mar 5, 2024)
Post-Earnings Price$18.73Open (Mar 6, 2024)
Price Change
$-2.17(-10.38%)
- Nordstrom Rack's Expansion is Driving Strong Returns and Customer Acquisition: The company opened 19 new Rack stores in 2023 and plans to open 22 more in 2024. These new stores are delivering great return on investment, are a great source of new customer acquisition for the brand, accounting for over 40% of new customers, and have great economics. The Rack stores are the company's largest source of new customer acquisition, and the expansion is a profitable investment supporting long-term customer retention.
- Operational Optimization Initiatives Continue to Drive Productivity Gains: Nordstrom is leveraging opportunities beyond just supply chain optimization by managing inventory throughout its entire life cycle. With a unique model where products start in the Nordstrom banner and end up in the Rack, the company sees continued opportunities to drive productivity across all operational areas. They have a strong supply chain team and are confident in gaining value in better managing product through its entire life cycle.
- Improved Inventory Management Enhances Margins and Customer Experience: The team has done a terrific job of building new disciplines in inventory management, resulting in inventory levels managed well in line with sales growth. This positions the company well to start the new fiscal year with newness in inventory, which is important for customers. Additionally, they are not seeing an elevated promotional environment, which should benefit merchandise margins as they progress through the fiscal year.
- Nordstrom expects EBIT margin to be pressured in 2024 due to SG&A headwinds, including increased labor costs and investments in new Rack store openings, which are not fully offset by gross margin expansion.
- Accessories, particularly handbags—which are a significant category for Nordstrom—have not been strong throughout the year, indicating potential weakness in a key revenue area.
- Store traffic remains soft, and while digital sales are expected to grow, Nordstrom anticipates their digital growth will be below market growth going forward, potentially challenging overall sales growth.
Research analysts covering JWN.