Nordstrom reported fourth-quarter earnings Monday, highlighting resilience in its core luxury business and growth in its off-price Nordstrom Rack division. This is despite the company navigating a pending privatization deal and a key leadership change. The announcement of CFO Cathy Smith’s departure—she’s headed to a global food services giant—raises eyebrows. Smith helped steer Nordstrom through pandemic chaos and into its current privatization push (a $6.25 billion family-led buyout). Her exit, as Erik Nordstrom noted, comes at a “pivotal moment,” but the company insists the transition will be smooth.
"We are grateful for Cathy's leadership over the past two years, which has been instrumental in strengthening our financial resilience and flexibility while maintaining our focus on providing customers with the best possible experiences. We wish her well in this next chapter," said Erik Nordstrom. "We are fortunate to have a strong financial leadership team to take on additional responsibilities and help ensure a smooth transition during our search."
Let’s unpack Nordstrom's latest earnings report, which is straight from Nordstrom’s leaders themselves and the data they shared.
Key Financial Results
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Q4 Net Earnings: $165 million ($0.97 per share), up 23% year-over-year.
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Full-Year Revenue: $14.9 billion, with adjusted EBIT margin improving to 4.1% from 3.4% in 2023.
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Comparable Sales Growth: +4.7% company-wide, driven by a 5.3% jump at Nordstrom’s full-line stores and 3.5% at Nordstrom Rack.
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Dividend: A $0.19 per share quarterly dividend declared, payable March 26.
The Highs and the Lows
Let’s start with the wins. Nordstrom’s 4.7% jump in comparable sales (5.3% at full-line stores, 3.5% at Rack) suggests that even in a shaky economy, shoppers still crave quality—but they’re hunting for deals. As CEO Erik Nordstrom put it: “Customers responded positively to the strength of our offering across both banners. We maintained the momentum we built throughout the year, which resulted in full-year sales and profitability coming in at the high end of our expectations."
Whether you’re splurging on a designer handbag or snagging last season’s jeans at Rack, Nordstrom’s dual strategy is working.
But there’s nuance here. While total revenue dipped 2.1% YoY, that’s largely because 2023 had an extra week of holiday sales. Strip that out, and sales actually grew 2.5%. For an industry scrambling to retain relevance, this signals something important: luxury isn’t dead, but it’s evolving.
The Quiet Revolution in What We're Buying
Nordstrom’s category trends tell a story of shifting priorities. Women’s apparel, activewear, and men’s clothing led growth, with kids’ wear and shoes also strong. Two things stand out:
- Power of Activewear: Once a pandemic-era fling, leggings-as-real-pants are now a full-blown romance.
- The return of 'dressing up': Women’s apparel growth hints at a post-WFH wardrobe refresh—think “soft office glam” over sweatpants.
Pete Nordstrom, the company’s president, said:
"Our team reacted with agility and speed to the holiday environment, responding in real-time to better serve our customers and drive strong financial results," said Pete Nordstrom, president of Nordstrom, Inc. "We consistently executed on our priorities in 2024 and we're grateful to our teams for their hard work to deliver on our purpose of helping customers feel good and look their best."
Luxury retailers can’t just rest on legacy brands anymore; they need to curate what’s next while keeping margins healthy.
The Rack Effect: Luxury's Open Secret
Nordstrom Rack’s 3.5% comp sales bump is a neon sign for the industry: value-conscious luxury is booming. Shoppers still want the thrill of a “find”—think $200 shoes for $80—but without the department store markup. As inflation lingers, this hybrid model (full-price prestige + off-price treasure hunts) could become the blueprint for rivals.
Leadership Shakeup and Privatization
Privatization itself is a gamble. While it frees Nordstrom from quarterly earnings pressure to focus on long-term reinvention, it also removes the transparency public investors crave. If successful, it could inspire other heritage retailers to follow suit.
What this means for the U.S. Luxury Industry
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The middle class isn't abandoning luxury. Nordstrom’s Rack growth proves that aspirational shoppers still want in, just on their terms.
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Category matters more than ever. Activewear and versatile workwear are eating into traditional formalwear’s share.
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Digital isn't a sideshow - it's the main stage. With 38% of sales coming online, Nordstrom’s hybrid model (buy online, pick up in-store, seamless returns) sets a bar.
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Privatization is on the rise. Struggling brands may seek refuge in private ownership to avoid Wall Street’s glare during reinvention.
As Erik Nordstrom said, “We maintained the momentum we built throughout the year.” That momentum now hinges on balancing legacy strengths with new rules: cater to deal-seekers without diluting your brand, invest in digital without losing the magic of in-store discovery, and navigate leadership changes without missing a beat.
