Nordstrom stock tumbles after earnings miss expectations

  • Nordstrom reported fourth quarter earnings on Thursday that fell short of earnings expectations, but beat on sales
  • Retailer has been trying to fund a take private of the company, the success of which depends on its business performance

Nordstrom reported fourth quarter earnings on Thursday that fell short of earnings expectations at a time the company is looking to raise financing for its management buyout.

The retailer reported adjusted earnings per share of $1.20, below the $1.24 expected by Thomson Reuters. Shares tumbled nearly 4 percent on the news.

Nordstrom is among a list of retailers, including Macy's, J.C. Penney and Kohl's, which reported strong sales this holiday season, boosted by increased spending and greater consumer confidence. But investors have been waiting to see if those riches made their way to the bottom line.

Nordstrom reported net earnings for the quarter of $151 million, down from $201 million the same quarter the year prior. That is despite booking revenue of $4.70 billion, above the $4.62 billion expected.

It attributed its weaker earnings to pre-opening costs associated with men's flagship in New York, as well as other Nordstrom Racks.

For the year, Nordstrom booked record sales of $15.1 billion, a 4.4 percent jump over the year prior.

Here's how Nordstrom did compared with what Wall Street expected:

  • EPS: $1.20 cents vs. $1.24 cents expected according to Thomson Reuters
  • Revenue: $4.70 billion vs. $4.62 billion expected according to Thomson Reuters

Nordstrom's sales growth for the quarter was driven largely by its e-commerce business. Financing sources have told CNBC its online performance is important in considering its take-private efforts.

Comparable online sales at Nordstrom.com jumped 12.4 percent, and at NordstromRack.com and HauteLook they jumped 23.7 percent. By contrast, at its full-line stores, they declined 1.7 percent, and at Nordstrom Rack they dropped .9 percent.

Nordstrom told investors in its earnings call it expects the size of its e-commerce business is at scale sufficient enough it can reach a "turning point" for profitability. E-commerce growth has come at a cost for many retailers, with heavy expenses associated in building it out. .
It also told analysts during a later afternoon conference call it is further focusing on new integration efforts for its e-commerce and brick and mortar business, which will first be explored in Los Angeles.

It said it does not plan to repurchase any shares as it "[explores] the possibility of a 'going private transaction.'"

For fiscal 2018, Nordstrom expects net sales of $15.2 billion to $15.4 billion. It expects earnings per diluted share of $3.30 to $3.55.

(Correction: An earlier version of this story misstated the Thomson Reuters estimates.)