To ward off attempts by online retailers to capture its high-end shoppers, the Seattle-based retailer has invested in its website, apps and a loyalty program, while also building out its Nordstrom Rack stores that sell off-price merchandise in the United States and Canada. Those stores compete with the likes of Macy's' Backstage stores and TJX's T.J. Maxx.
The off-price business gained 7 million new customers last year and Nordstrom said it expects about one-third of off-price customers to cross-shop in the full-price business within a year.
"The off-price story doesn't surprise me at all because people like cheap things," said Forrester Research analyst Sucharita Kodali. "What I'm surprised by is that, in this relatively strong economy in which the affluent are doing pretty well, I would think that these luxury retailers would be doing better than they are."
Nordstrom's fourth-quarter net income rose to $248 million, or $1.48 per share, compared with $151 million, or 89 cents per share, a year earlier. That beat Wall Street's average estimate of $1.42 per share, according to IBES data from Refinitiv.
The retailer said same-store sales rose 0.1 percent in the fourth quarter, missing the 1.1 percent increase expected by Wall Street analysts.
Comparable sales at its full-price stores decreased 1.6 percent, primarily because of weaker traffic at its full-line stores. Off-price comparable sales increased 4 percent.
For the full fiscal year, Nordstrom forecast earnings of between $3.65 and $3.90 per share. That is largely above Wall Street's average estimate of $3.67 per share.
Total revenue fell to $4.48 billion from $4.7 billion. Analysts were expecting total revenue of $4.61 billion, according to IBES data from Refinitiv.
Earlier on Thursday, retailer J.C. Penney reported quarterly results that topped estimates as the struggling retailer sold more jewelry and apparel during the key holiday shopping season.
On Tuesday, rival Macy's said it would cut 100 senior management positions to reduce costs and improve profitability, and reported holiday same-store sales growth short of Wall Street's expectations.