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# Nordstrom’s Forecast Disappoints Wall Street Expectations

By Ananya Mariam Rajesh

## Slow Rebound in Demand Leads to Lower-Than-Expected Annual Results

(Reuters) – Nordstrom’s forecast for annual results falls largely below Wall Street expectations, indicating a slower-than-expected rebound in demand even as consumers experience some relief from easing inflationary pressures. The department store chain’s shares tumbled 10% to $18.83 after the bell.

## Weak 2024 Sales Signal Caution from Consumers

Nordstrom joins peer Macy’s in signaling weak 2024 sales, as retailers prepare for another year where spending on non-essential items like apparel and household equipment is likely to face continued pressure. Nordstrom CFO Cathy Smith mentioned, “We continue to see a cautious consumer that is mindful of discretionary purchases in light of inflation and higher interest rates.”

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## Forecasted Revenue and Profit Fall Short of Analysts’ Estimates

Nordstrom expects 2024 revenue to fluctuate between down 2% and up 1%, while analysts had forecasted an increase of 0.04%, according to LSEG data. The company also forecasts annual profit per share in a range of $1.65 to $2.05, below analysts’ expectations of $1.98. Additionally, Nordstrom anticipates first-quarter results to be close to break-even or a slight loss.

## Analysts Comment on Nordstrom’s Outlook

Morningstar analyst David Swartz expressed disappointment in Nordstrom’s outlook, stating, “The company really just hasn’t recovered that well from the pandemic.” Despite this, Nordstrom’s fourth-quarter total revenue of $4.42 billion exceeded estimates of $4.39 billion, driven by strong demand for running shoes and beauty products during the holiday season.

## Strategic Initiatives to Attract Lower-Income Consumers

Nordstrom’s discount banner, Rack, saw a 14.6% rise in sales, while the company’s eponymous label experienced a 3% decline in revenue. The company is actively working to introduce trendier products at its Rack stores and plans to open 26 new stores in 2025 to appeal to lower-income consumers impacted by rising living costs.

## Nordstrom’s Performance in the Fourth Quarter

Excluding items, Nordstrom earned 96 cents per share in the fourth quarter, surpassing estimates of 88 cents, attributed to lowered supply costs and reduced markdowns. The company’s efforts to control operational expenses have positively influenced its financial performance.

## Conclusion

Despite challenges in the retail landscape, Nordstrom remains focused on enhancing its product offerings, expanding its customer base, and optimizing operational efficiency. With strategic planning and adaptability, Nordstrom aims to navigate through the evolving market dynamics and achieve sustainable growth in the future.

*(Reporting by Ananya Mariam Rajesh in Bengaluru; Additional reporting by Kate Masters; Editing by Shounak Dasgupta)*

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