Nordstrom on Tuesday said it has dismantled its management structure of co-presidents, naming Erik Nordstrom as its sole CEO and former co-president and brother Pete Nordstrom as president and chief brand officer, according to a filing with the Securities and Exchange Commission.
The move keeps control within the founding family, and comes as the department store reported a mixed fourth quarter, with revenue and profits both missing estimates from Credit Suisse and Wedbush analysts, according to notes emailed to Retail Dive.
The company's Local stores are delivering. In general, order pickup sales in the quarter were up more than 100% and contributed to more than half of its full-price e-commerce growth, Erik Nordstrom told analysts Tuesday, according to a transcript from Motley Fool. In the five markets where Local operates, order pickup sales grew 160%, he said.
Nordstrom appears to be doing everything right in the highly pressured department store segment, yet could only deliver an anemic fourth quarter.
Net sales in the period rose 1.3% to $4.4 billion, with full-price net sales up 1% year over year to $3 billion and off-price net sales up 1.8% to $1.4 billion. Net earnings in the quarter fell to $193 million from $248 million in the year-ago period, hit to the tune of $29 million by the integration of Trunk Club and debt refinancing costs.
The company has been at the forefront in developing concepts to update the department store model, but their underperformance is "sobering," according to Credit Suisse analyst Michael Binetti. The New York City flagship (opened last October), its Canada operations, Trunk Club styling service and off-price e-commerce "were supposed to be" delivering some $400 million in annual revenue growth on average, but the company now sees just $200 million coming in this year, Binetti noted.
The retailer had a relatively weak holiday due to "lackluster" merchandise for apparel and gifts, according to GlobalData Retail Managing Director Neil Saunders. Nordstrom doesn't report comp sales anymore, but GlobalData calculates that holiday apparel and gift sales were down year over year on a same-store basis.
"We have harbored concerns for some time about the lack of edginess and differentiation in Nordstrom's range and while we think things are slowly getting better, the company must work much harder to gain customers and boost its share of wallet," Saunders said in emailed comments, noting sharper declines in suburban and secondary locations than in big city stores. "Once again this underlines the need to tailor ranges by location and for Nordstrom to be more sensitive to local needs."
And while more "impressive," the company's off-price business remains overshadowed by stalwarts in the space like TJX and Ross, "which posted sales gains far in excess of Nordstrom Rack," he said.
The company's online order pickup, supported by a Local store strategy set to expand further this year, is a different story. Fourth quarter digital sales rose 9% and were 35% of sales, with online order pickup contributing more than half of digital growth in full price, according to the company's filing.
"2020 is about scaling our [Local] strategy in ten of our top markets, which represent more than half of our sales," Erik Nordstrom said on Tuesday.