Retailer Nordstrom is looking to capitalize on growing demand for its discount Rack store concept by opening 21 locations this year, nearly matching last year’s total.
The Seattle-based chain opened six Rack stores in the fourth quarter for a total of 23 in the 2024 fiscal year, helping drive 4.7% sales growth for the full year in the off-price format that Nordstrom executives have called a growth driver for the company.
The company reported better-than-expected earnings and revenue for the fourth quarter, with sales strength in both Racks and its flagship Nordstrom department store brand. U.S. big-box retail chains like Nordstrom have felt the pinch as customers become more price-conscious after years of rising interest rates and inflationary pressures.
Rack store sales grew 3.5% and flagship sales increased 5.3% during the quarter, adding to a more than 23% profit jump to $165 million for the company from the year-earlier period.
Nordstrom ended the year with a total of 377 stores, including 277 Nordstrom Rack stores, compared with 359 total stores, including 258 Rack locations, in the prior-year period.
The company said its deal to go private with Mexican retail group El Puerto de Liverpool is on track to close in the first half of the year. The Nordstrom family is partnering with the retail group to acquire the company for $6.25 billion, according to a deal signed in December.
Geographic growth
The strong customer response across both brands "caps off a year of impressive improvement for Nordstrom," Morgan Stanley Equity Analyst Alex Straton said in a note to investors, while noting that details about the fourth-quarter results were limited because the company did not host an earnings call due to the pending go-private deal.
Nordstrom would be owned 50.1% by the Nordstrom family and 49.9% by Liverpool following the close of the transaction that would delist the company’s common stock from public markets.
The retailer also said that Cathy Smith will step down as chief financial officer to join Starbucks, also based in Seattle. Nordstrom said it has started a search for a new CFO.
More than a quarter of the new Rack stores that Nordstrom added last year are in California, with the remainder divided between Arizona, Florida, Georgia, Illinois, Indiana, Nebraska, New York, North Carolina, Ohio, Texas and Tennessee.
The company's 21 planned Rack openings this year are in Arizona, California, Colorado, Florida, Idaho, Illinois, Minnesota, North Carolina, New Hampshire, New Jersey, New York, Massachusetts and Texas.
Rack stores that the company opened last year and plans to open in 2025 range between 23,000 square feet and 36,000 square feet.