Nordstrom (JWN) reports lower revenue for the fourth quarter of 2021

Nordstrom on Tuesday reported better-than-expected earnings and sales for the holiday quarter, prompting retailers to offer an optimistic outlook for next year, despite continuing concerns in the supply chain and rampant inflation.

Shares of Nordstrom jumped more than 35% in after-hours trading immediately after the report. Nordstrom is currently among the stocks with the most short trades, with 22% of its shares available for short sale.

Importantly, retailer has called for improvements in its off-price business, Nordstrom Rack, amid a report that the company is reviewing potential segments of the segment after its poor performance in recent quarters.

For its fourth fiscal quarter, Nordstrom said Rack’s net sales fell 5% over the two-year period, a steady improvement from the previous quarter, when its off-price segment fell 8% from 2019.

However, the segment lags behind Nordstrom’s overall business, with this revenue stream recovering to virtually equal levels with 2019 levels.

During the pandemic, Rack struggled to procure goods as he relied on other brands of clothing to unload items to sell on release. With less clothing inventory, the company has difficulty storing shelves. Rack also competes with other chains at lower prices, including TJ Maxx, Ross Stores, Burlington and Macy’s Backstage.

Nordstrom CEO Eric Nordstrom said in a statement that the department store chain is focused on three key things: improving Nordstrom Rack’s productivity, increasing profitability and optimizing the supply chain and inventory flow.

Here’s how the retailer performed in its fourth quarter compared to what Wall Street expected, according to a study by analysts at Refinitiv:

• Earnings per share: $ 1.23 versus $ 1.02 expected
• income: $ 4.49 billion against the expected $ 4.35 billion

Nordstrom’s net profit for the quarter ended January 29 rose to $ 200 million, or $ 1.23 per share, from $ 33 million, or 21 cents per share, a year earlier. This exceeds the earnings per share forecast of $ 1.02, according to Refinitiv.

Total revenue, including credit card sales, rose to $ 4.49 billion from $ 3.65 billion a year earlier. That exceeds estimates of $ 4.35 billion. Net sales, which do not include credit card revenues, increased by 23% during the year, but decreased by 1% compared to 2019 levels.

The department store chain said that its categories of home, active, designer, cosmetic and children’s are the most prominent, as buyers were looking for comfortable clothing and more items to decorate their homes.

Suburban shops also continue to perform better than urban areas, it said. This is largely due to the lack of international tourists in the United States

Digital sales, boosting in the early days of the pandemic by keeping consumers at home, fell 1% from the same period in 2020. However, they rose 23% on a two-year basis and accounted for 44% of total revenue for the quarter.

In the coming months, Nordstrom hopes – like other retailers – that consumers will return to offices, parties, concerts and other social venues. His business is ready to take advantage, as buyers spend money to freshen up their wardrobes.

Nordstrom said on Tuesday that it has so far been encouraged by the resumption of consumer travel following the launch of the omicron option.

For fiscal 2022, Nordstrom sees revenue, including credit card sales, up 5% to 7% from 2021. Analysts had expected growth of 3.7%.

He sees earnings, excluding the impact of any share repurchase activity, in the range of $ 3.15 to $ 3.50 per share. That’s far ahead of the $ 2.01 share earnings forecast.

Pete Nordstrom, president and CEO, said Nordstrom is focused on balancing inventory levels with demand. During the pandemic, the company struggled to bring seasonal items into stores at the right time due to poor planning and lagging behind in the supply chain.

Nordstrom said it ended the fourth quarter with more inventories than planned, but expects those levels to fall from first-quarter sales.

The company also advertises a growing media advertising platform that allows brands to pay and advertise on its website. Retailers from Macy’s to Target to Best Buy are investing in their own advertising platforms as a new revenue stream.

“We believe we have a meaningful opportunity to improve both the consumer experience and our financial performance,” Pete Nordstrom told analysts during a conference call on profits.

Ahead of a long jump in trading on Tuesday, Nordstrom shares fell about 14% year on year.

Find the full Nordstrom financial press release here.