Upscale apparel retailer, Nordstrom Inc, recently reported a sales miss for the fourth quarter and announced Erik Nordstrom as its sole CEO. This announcement caused the company’s shares to drop by almost 8% in after-market trading. Like many other brick-and-mortar retailers, Nordstrom has been facing challenges in competing with online giants such as Amazon.com Inc and discount retailers like Marshalls and T.J. Maxx.
During a post-earnings conference call, Nordstrom executives highlighted the company’s investments in loyalty programs, inventory management, and product assortment in an effort to reassure investors about the company’s future prospects. However, Nordstrom’s profit forecast for fiscal 2020 is significantly lower than market expectations, with an estimate of $3.25 to $3.50 per share, compared to analysts’ projections of $3.49 per share. Importantly, the company did not include any potential impact from the ongoing coronavirus outbreak in its forecast. This is concerning for the industry, as it heavily relies on foot traffic and international tourism sales.
Nordstrom has been actively working to attract and retain customers by launching concept stores like “Nordstrom Local” and forming partnerships with clothing rental firm Rent the Runway. Despite these efforts, the company’s net earnings for the fourth quarter fell to $193 million, which falls below Wall Street’s expectations of $248 million. While the total revenue for the quarter did experience a slight increase to $4.54 billion, it still fell short of estimates.
In comparison, Kohl’s Corp managed to exceed expectations for holiday-quarter profit, while Target Corp predicted full-year profit below analysts’ estimates and also missed expectations for the reported quarter.
Overall, Nordstrom’s struggles are representative of the challenges faced by traditional retailers in the current competitive landscape. As online shopping continues to soar in popularity, companies will need to adapt and find innovative ways to keep customers engaged and attract new ones.