Nordstrom (NYSE: $JWN) is an upscale fashion retailer that operates a chain of department stores renowned for superior customer service. Founded in 1901, the Seattle-based retailer sells apparel, shoes, cosmetics, and accessories across the United States and Canada. Nordstrom’s multi-brand strategy includes its full-line stores, off-price Nordstrom Rack locations, and e-commerce platforms. 

On the evening of March 5, 2024, Nordstrom reported its fourth quarter and fiscal 2023 financial results for the year ended February 3, 2024. Despite exceeding Wall Street analysts’ projections, the company’s stocks experienced a 9.95% decline during pre-market trading today on disappointing 2024 guidance.

Nordstrom Q4 2023 Financial Highlights 

Nordstrom reported a 2.2% increase in net sales, bolstered by a 460 basis point contribution from the 53rd week. Total revenue reached $4.42 billion, surpassing analysts’ estimates of $4.38 billion. On a non-GAAP basis, the company’s EPS stood at $0.96, beating analysts’ expectations of $0.89 by 7.7%. 

The company’s gross profit increased 125 basis points, compared to the same period in fiscal 2022, to hit 34.4%. This growth is attributed to decreased markdowns, lower buying and occupancy costs, and the advantageous impact of higher sales leverage.  

Ending inventory saw a 2.7% decline, while sales exhibited a 2.2% increase. SG&A expenses increased by 85 bps to 32.4%. However, this uptick was partially offset by enhancements in variable costs from supply chain efficiencies and leverage on higher sales. 

In Q4 2023, EBIT reached $215 million, up from $187 million in the same period in fiscal 2022. Adjusted EBIT, excluding a supply chain asset impairment charge, was $247 million. The income tax expense rose to $55 million (29.1% of pretax earnings), up from $41 million (25.2% of pretax earnings) in the same period in 2022.  

Robust Full-Year Performance 

For the full fiscal year 2023, Nordstrom reported a total revenue of $14.69 billion and an adjusted EPS of $2.12. Net earnings stood at $134 million, with a gross profit of 34.6% and SG&A expenses of 34.2%. The company reported an EBIT of $251 million.  

Additionally, the adjusted EBIT, which excludes charges associated with the wind-down of Canadian operations and a supply chain asset impairment charge, amounted to $567 million. The income tax rate for the year was 25%. The company concluded the year with $1.4 billion in total available liquidity, comprising $628 million in cash. 

Disappointing Outlook for Fiscal 2024 

In fiscal 2024, Nordstrom foresees sustained progress in growth and profitability. The company plans to open new Nordstrom Rack stores, boost digital sales for the Nordstrom banner, and drive comparable sales across both banners. 

Nordstrom anticipates a revenue fluctuation of 2.0% decline to 1.0% growth, factoring in the 53-week fiscal 2023 with a 135 basis point negative impact from the extra week. Comparable sales are projected to range from a 1.0% decline to 2.0% growth compared to the 52 weeks in fiscal 2023.  

EBIT margin is expected to fall between 3.5% and 4.0% of sales, while the income tax rate is estimated at approximately 27%. The forecasted EPs range is $1.65 to $2.05, excluding any influence from share repurchase activities. 

Pete Nordstrom, the president of Nordstrom, Inc., highlighted the progress made in 2023 in improving merchandise assortments and effectively managing inventory levels.

He stated, “This year, we’ll build on that progress in merchandising and other green shoots across our business as we focus our efforts on our refreshed 2024 priorities.” 

Additionally, Nordstrom announced a quarterly cash dividend of $0.19 per share, payable on March 27, 2024.

Nordstrom (JWN) Stock Performance 

The stock market reacted negatively to Nordstrom’s financial results, with investors driving the company’s shares down by a significant 9.95% in pre-market trading to $18.82. This decline followed a market closing price of $20.90, representing a modest 1.55% increase from the previous day’s closing figure of $20.58. 

Over the past year, Nordstrom’s stock has experienced fluctuations, ranging from a high of $23.53 to a low of $12.88. Despite these variations, the stock achieved a modest growth of 5.59%, lagging behind the more robust 28.53% increase in the S&P 500 index. 

Nordstrom’s 50-day moving average is $19.03, exceeding the most recent after-hours trading price. The company has a total of 162.33 million outstanding shares. 

Should You Buy Nordstrom Stock?  

Nordstrom’s Q4 and FY2023 performance showcased its ability to navigate a challenging retail environment while focusing on efficiency and cost management. While the market reacted negatively to the results, the company’s strategic initiatives and outlook for the upcoming fiscal year indicate a commitment to driving growth and profitability. 

From an analyst’s perspective, Nordstrom’s stock presents a potential opportunity for long-term investors. The company’s efforts to enhance its digital presence, expand its Rack store footprint, and drive comparable store sales could position it favorably in the evolving retail landscape.  

However, closely monitoring the company’s execution and macroeconomic factors will be crucial in determining the stock’s performance. Overall, analysts suggest a cautious “hold” stance on JWN stocks. 

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