Nordstrom (JWN 0.12%), a fashion retailer known for its flagship stores and Nordstrom Rack discount outlets, reported its fourth quarter 2024 earnings on March 4, 2025. The company exceeded expectations with an adjusted earnings per share (EPS) of $1.10, compared to the consensus estimate of $0.93. Revenue came in at $4.32 billion, slightly ahead of the anticipated $4.28 billion. This performance reflects Nordstrom's effective cost management, although challenges in inventory and selling, general, and administrative (SG&A) expenses remain a concern. Overall, the quarter indicates solid strategic execution in digital sales and company operations.
| Metric | Q4 2024 | Q4 2024 Estimate | Q4 2023 | Y/Y Change |
|---|---|---|---|---|
| Adjusted EPS | $1.10 | $0.93 | $0.96 | +14.6% |
| Revenue | $4.32B | $4.28B | $4.42B | -2.3% |
| Adjusted EBIT | $273M | N/A | $247M | +10.5% |
Source: Analyst estimates for the quarter provided by FactSet.
Nordstrom is recognized for its high-end department stores and Nordstrom Rack outlets, the latter offering discounted, quality fashion. Its business model centers on omni-channel integration, meaning customers can seamlessly shop in-store, online, or via mobile. Nordstrom's Rack stores are key to attracting bargain-conscious consumers. Expansion of this format was a focus during the quarter, tapping into the price-sensitive market. Customer loyalty, promoted by its Nordy Club program, aligns with omni-channel strategies, allowing customers to leverage points and rewards across all platforms.
Strategically, Nordstrom emphasizes digital integration, with digital sales comprising 38% of total sales. The company opened several new Nordstrom Rack stores in 2024 to bolster growth. Main success factors include enhancing customer loyalty, optimizing digital platforms, and managing inventory efficiently, crucial areas due to challenges like rising labor costs and operational expenses.
The fourth quarter witnessed Nordstrom increasing its adjusted EPS to $1.10, outpacing the prior year by 14.6%, and besting analysts' expectations by 18.3%. This reflects effective cost control despite elevated SG&A expenses, which accounted for 34.4% of sales—up from 32.4% a year ago. Net sales for the quarter totaled $4.32 billion, topping the estimated $4.28 billion, albeit a slight decline from $4.42 billion the prior year due to a difficult comparable period in 2023.
Sales trends were strong within women's apparel, activewear, and men's fashion, boosting comparable sales by 4.7%. This includes a 5.3% same-store sales increase within the flagship Nordstrom banner. A particular focus on expanding its off-price Rack outlets saw comparable sales grow by 3.5%, despite a challenging competitive landscape. Digital sales growth at 2.6% underscored successful omni-channel investments.
Inventory levels rose 11.4% by the quarter's end, attributed to robust intake of top brands and in-transit stock toward the end of the period. This elevation poses future risk of markdowns if sales slow. Nordstrom's strategic hikes in technology and privatization fees partly drove the SG&A uptick. However, customer engagement via initiatives like the Nordy Club fueled loyalty and sales.
Notable events this quarter included opening new Nordstrom Rack locations, strengthening the business's growth trajectory and capturing more value-oriented consumers. However, SG&A outlays, labor expenses, and technology depreciation raised costs, pressuring margins. Excluding one-time supply chain costs and Canada wind-down impacts, the adjusted EBITDA was robust.
Looking forward, Nordstrom withheld financial guidance due to a pending move to become a private company.
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