Nordstrom announced it is opening 20 additional Nordstrom Rack stores in 2024.Nordstrom stock fell over 10% during after-hours trading Tuesday following the company’s forecast that sales in its fiscal year 2024 could decline.
The luxury department store chain said in its latest quarterly earnings report that its revenue in the coming year could land between a decline of 2% and an increase of 1%. Surprisingly, its discount store chain Nordstrom Rack could be a source of growth for the company as more cash-strapped consumers are ditching full-priced shops.
Fewer than two in five in-person shoppers are visiting full-price shops to buy their clothes, according to a report by research firm Placer.ai. Instead, they are opting for off-price outlets like Nordstrom Rack and T.J. Maxx. The latter of which was able to leverage this trend into a record $50 billion in sales last year. The same shift is becoming apparent among the two Nordstrom store brands.
Net sales at traditional Nordstrom stores fell 3% year-over-year to about $2.9 billion during the 14 weeks ending Feb. 3. Sales at Nordstrom Rack stores, however, grew 15% to $1.4 billion during the same period.
Nordstrom’s fourth quarter, by the digits
Overall, Nordstrom’s profit increased 12% in the fourth quarter of 2023 to nearly $134 million from $119 million in the same period the prior year. The company’s revenue was up 2% year-over-year to $4.3 billion in its fourth quarter, from $4.2 billion. Its diluted earnings per share came to $0.82, below Wall Street expectations of $0.89, according to a consensus estimate from analysts surveyed by FactSet.
All in on Nordstrom Rack stores
Acknowledging Nordstrom Rack as one of its brightest spots, the company announced it plans to open 26 new Rack locations in 2024 and 2025. This comes after the company already opened 20 new Rack stores last year.