Nordstrom will open 22 Rack stores in 2024 as the financial results of the Seattle-headquartered retailer’s discount arm outpaced the namesake brand in 2023 and the last quarter of the fiscal year, the company said Tuesday.
The Seattle-based retailer did not announce any new Nordstrom stores. Rack is the main way Nordstrom attracts new customers and is “a growth engine” for the company, CEO Erik Nordstrom said in a call with investors Tuesday. Last year, the company opened 19 Rack stores.
“We’re laser-focused on efforts we know will drive growth and profitability across the business over the next few years, including new Rack store openings, Nordstrom digital growth and increasing store sales,” Erik Nordstrom said.
None of the planned Rack stores are in Washington. Locations include San Diego; Omaha, Neb.; and Houston. In September, Nordstrom opened two Rack stores in Washington, in Olympia and Union Gap, Yakima County.
In the company’s 2023 fiscal year, which ended last month, Rack net sales were $4.8 billion, remaining largely unchanged compared to the previous year, and above analysts’ expectations of $4.6 billion.
The company as a whole reported $14.2 billion in total sales, a decrease of 5.8% compared with the previous year and above analyst expectations of $14.1 billion.
Net earnings decreased 45%, to $134 million, in the latest fiscal year compared with the previous year.
Total net sales for Nordstrom-bannered stores were $9.4 billion during the year, below analysts’ expectations of $9.5 billion and down 8.2% from the previous year. During the 2022 fiscal year, Nordstrom store sales increased 6.6%.
In the last quarter of the year, which includes the holiday season, Rack was a significant source of sales growth for the company. Rack net sales grew 14.6% during that period compared with the previous year, while Nordstrom sales declined 3%.
Rack performance largely improved from last year’s fourth quarter results, when its sales decreased 8% from the previous year.
In the 2024 fiscal year, Nordstrom wants the flagship brand to grow through digital sales supported by stores, such as through buy online, pick up in store services, Erik Nordstrom said. The brand strategy includes the launch of an online marketplace in April on Nordstrom’s website, which allows the company to sell inventory owned by other retailers.
The company’s strategy for Rack during the coming year is to build on its momentum, Erik Nordstrom said.
“As we’re opening more new stores, we’re finding our performance and efficiency continues to improve,” he said.
In total, digital represented 36% of sales in the fiscal year, down from 38% in the previous year.
Nordstrom expects revenue to be in a range of negative 2% to up 1% this year, which has one fewer week of sales compared to the 2023 fiscal year.
“We’re going to grow with Rack,” said Cathy Smith, Nordstrom’s chief financial officer. “We’re very, very focused on driving digital growth.”
Nordstrom shares decreased 10.1% in after-hours trading Tuesday.
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