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Nordstrom earnings top expectations, retailer says it’s winding down Canada operations

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Miami, Florida, Coral Gables Shops at Merrick Park, Nordstrom Department Store with shopper entering.

Jeff Greenberg | Universal Images Group | Getty Images

Nordstrom on Thursday reported lower sales and profits for the holiday quarter, although earnings topped Wall Street’s expectations.

The company said it expects sales to decline in the new fiscal year, reflecting in part its decision to wind down its Canadian operations.

“We entered Canada in 2014 with a plan to build and sustain a long-term business there. Despite our best efforts, we do not see a realistic path to profitability for the Canadian business,” CEO Erik Nordstrom said in a release Thursday.

Here’s what the department store reported for the fiscal fourth-quarter compared with what analysts were anticipating, based on Refinitiv estimates:

Earnings per share: 74 cents vs. 66 cents expected
Revenue: $4.32 billion vs. $4.34 billion expected

Nordstrom has struggled with slower sales, more markdowns and scrutiny from a prominent activist investor. Its net income in the period ended Jan. 28 fell to $119 million, or 74 cents per share, from $200 million, or $1.23 per share, a year earlier.

For the new fiscal year, Nordstrom expects revenue to fall 4% to 6%. It also projected EPS of 20 cents to 80 cents for the year.

Michael Maher, interim chief financial officer, said Nordstrom factored a more challenging economic backdrop and higher costs into its year-ahead forecast.

“We expect that elevated inflation and rising interest rates will continue to weigh on consumer spending, especially in the first half of the year,” he said on a call with investors. “We also anticipate continuing inflationary pressure on our expenses especially labor and transportation costs.”

He said the outlook included an approximately 2.5-percentage-point negative impact from the wind-down of its operations in Canada, a business that drove about $400 million in sales in the fiscal 2022 year.

As of Jan. 28, the company said it had six Nordstrom stores and seven Nordstrom Rack stores in Canada. Nordstrom said it ceased its Canadian e-commerce platform Thursday. It expects to finish Canadian store closures in Canada by late June.

Even before Nordstrom reported earnings, it cut its forecast and told investors that it had a rough holiday. In January, the department store chain said its net sales dropped 3.5% for the nine-week period that ended Dec. 31 compared with the year-ago period. Its net sales declined sharply during that stretch at its off-price banner, Nordstrom Rack.

One of the reasons for disappointing sales? More markdowns. Nordstrom said it discounted merchandise more than expected in November and December, so it could start the fiscal year with a healthier level of inventory.

The company drew attention and saw its stock soar in February, as activist investor Ryan Cohen bought a large stake in the company. Cohen, the chairman of GameStop and founder of Chewy, is interested in using that position to push for change — including getting former Bed Bath & Beyond CEO Mark Tritton off of Nordstrom’s board.

Cohen bought, and later sold, a major stake in Bed Bath, after criticizing Tritton’s strategy and pushing for change at that company, too.

As of Thursday’s close, Nordstrom shares are up more than 19% this year.

Read the full Nordstrom earnings release.

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March 2, 2023

Cramer: Apple, Amazon, Microsoft and Google will fuel the next rally — but not in the usual way

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To build a fire — but not destroy the market by doing so. That’s the goal right now. It’s not as easy as in the famous Jack London short story (“To Build a Fire”) where, in the end, the survivors profit rather than freeze to death in their sleep. In the early part of this decade, we saw the rise of Robinhood (HOOD) and the distribution of investments from the serious to the ephemeral. These days, Robinhood has the appearance of one gigantic bonfire of young people’s money. The gamification concept was real and the exodus of investors was noisy — culminating with the ridiculous self-immolation of GameStop (GME), AMC Entertainment (AMC) and the meme stocks. Those who fought this trend abandoned Twitter, hired bodyguards and tried to hide from the angry mob that was attempting to will stocks higher by savaging the sellers. No tinder from these clowns. Then there was the much larger-than-expected romp to crypto. The people who bought it somehow ensconced their brains into something they didn’t understand. As a result, they overran their brains and outsourced them to others who claimed to know more than they did. You had to oppose a phalanx of vociferous, self-promoting scoundrels and their fintech allies in government and venture capital — all of whom should feel shame, but shame eludes them. They will not accept their intellectual disgrace, and instead, continue to argue that it was all about blockchain and DeFi (decentralized finance). They want to explain to you why they got it right and you got it wrong, even as they lost everything and you were safe keeping your cash at JPMorgan. I wish I had a hubris scale, something like a gigantic thermometer that could measure these arrogant promoters and give them the hook when they contend that they are smarter than you for believing in something with a best-use case as untraceable ransom money. But this era is running out. It’s going to be done with a fight, of course, as we see its representatives defend themselves with specious arguments that sound so self-serving and outright phony that even neutral minds are repelled and rebelling. The money furnace that was Robinhood burns blandly compared to the napalm of crypto. The interests that defended crypto can’t go quietly because they will empty the coffers of their crypto banks and cause waves of bankruptcies; the $34 billion that we know of that was destroyed by Sam Bankman-Fried — the disgraced former boss of failed crypto exchange FTX — pretty much propped up everything. We keep getting stung by the alleged due diligence done by so many who should have known better, with only a couple of institutions writing their investments to nothing, along with their explanations, or lack thereof. Here’s the problem: If it all goes away — crypto and all the institutions supporting it — the money that’s left won’t help push equity prices higher. It was once a magnet to a couple of trillion dollars. Now I wonder if there’s $400 billion to the entire edifice. The whole thing reminds me of a line from the film “Beau Geste,” when two of the main characters are under attack: “You’ll do your duty better dead than you ever did alive.” The biggest guns are most likely liquidating as they talk, the duplicitous cads. They will tell us that we are fools not to believe in blockchain as if somehow that is dispositive to something other than lies and blunders. My point is this: The crypto con and the Robinhood dollar conflagration can’t produce enough money to buoy stocks. There’s not enough left in these embers to do anything but marvel at how much there used to be and how little bankruptcy produces. No matter how many hearings, we will never know the full culpability behind those in Congress and those in the Securities and Exchange Commission who opposed SEC Chairman Gary Gensler. He came on CNBC specifically to warn us of made-up coins and institutions that give you too high a return compared to cash in a real bank. Self-serving cryptocurrency players have been critical of the SEC. They want to school Gensler and let him know he can only go so far before running into all the well-endowed entities and their secret paid supporters. The horror! The horror! So where else will the money come from? Unlike the chimerical trillions that vanished into thin crypto air, the fuel will come from four stocks that have a combined total of $6 trillion to donate: Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) and Amazon (AMZN). There is simply too much money in these names to take us higher, or at least how high we can go after the Federal Reserve’s next meeting this week. But I think some of that investor money will be transferred into the stocks of companies that have the most voracious buybacks. Those are the companies without enough stock available to handle all the money that will flood in. Money in those four stocks will be pulled out, kicking and screaming, until the valuations become earthly — better than Meta Platforms (META) and more like the S & P as they are revealed to be mortal. Not until then can the rally start in earnest. Can these valuations be played out? It’s happening as you read this. Of course, there’s one other enemy to the advance and it’s a powerful one: The 4.5% yield from 2-year Treasurys is outrageously bountiful in a market where anything north of 4% in equities is likely tied to plummeting oil. However, we cling to the oils, betting that they can maintain their well above market prices when Russia can’t produce its endless reserves and China goes voracious upon reopening. I think we will win. Bottom line We will hold Apple, Microsoft, Alphabet and Amazon, even as we’ve trimmed them higher. Their spiral down to earth, however, will be painful. If we hadn’t sold some, it would be getting late in the game. But I suspect there’s more pain to come. Why take it? Because these companies still have value, even though it won’t surface until the selling’s done and we don’t know when that will occur. It’s too dangerous now to depart, although Apple could see $120 and Microsoft a 10-point decline. Amazon and Alphabet control their own destinies through headcount reductions. The good news? The selling could end after the Fed meeting. The bad news: If it does, there will not be enough rocket fuel. The big four need to shed a trillion minimum to power things higher. I think it will happen in time. Which would mean a brutal week until the transfer begins to be made. Hold on to what you have, but get ready to be lifted by the stocks with the strongest buybacks. That’s where the accumulation will matter the most. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Satya Nadella, chief executive officer of Microsoft Corp., during the company’s Ignite Spotlight event in Seoul, South Korea, on Tuesday, Nov. 15, 2022. Nadella gave a keynote speech at an event hosted by the company’s Korean unit.

SeongJoon Cho | Bloomberg | Getty Images

To build a fire — but not destroy the market by doing so.

That’s the goal right now. It’s not as easy as in the famous Jack London short story (“To Build a Fire”) where, in the end, the survivors profit rather than freeze to death in their sleep.

In the early part of this decade, we saw the rise of Robinhood (HOOD) and the distribution of investments from the serious to the ephemeral. These days, Robinhood has the appearance of one gigantic bonfire of young people’s money. The gamification concept was real and the exodus of investors was noisy — culminating with the ridiculous self-immolation of GameStop (GME), AMC Entertainment (AMC) and the meme stocks. Those who fought this trend abandoned Twitter, hired bodyguards and tried to hide from the angry mob that was attempting to will stocks higher by savaging the sellers. No tinder from these clowns.

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December 12, 2022

Sam Bankman-Fried steps down as FTX CEO as his crypto exchange files for bankruptcy

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Sam Bankman-Fried’s cryptocurrency exchange FTX has filed for Chapter 11 bankruptcy protection in the U.S., according to a company statement posted on Twitter. Bankman-Fried has also stepped down as CEO and has been succeeded by John J. Ray III, though the outgoing chief will stay on to assist with the transition.

Approximately 130 additional affiliated companies are part of the proceedings, including Alameda Research, Bankman-Fried’s crypto trading firm, and FTX.us, the company’s U.S. subsidiary.

In the 23-page bankruptcy filing obtained by CNBC, FTX indicates it has more than 100,000 creditors, assets in the range of $10 billion to $50 billion, as well as liabilities in the range of $10 billion to $50 billion. Bankman-Fried also indicated he wishes to appoint Stephen Neal as the firm’s new chairman of the board.

CNBC reached out to Adam Landis, founding partner of Landis Rath & Cobb LLP, who filed the Chapter 11 proceedings on behalf of FTX. CNBC did not immediately hear back to our request for comment.

“The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders,” said the new FTX chief, Ray.

“The FTX Group has valuable assets that can only be effectively administered in an organized, joint process. I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency,” continued Ray.

He added that stakeholders should understand that events have been fast moving, that the new team is engaged only recently and that they should review the materials filed on the docket of the proceedings over the coming days for more information.

It caps off a tumultuous week for one of the biggest names in the sector.

In the space of days, FTX went from a $32 billion valuation to bankruptcy as liquidity dried up, customers demanded withdrawals and rival exchange Binance ripped up its nonbinding agreement to buy the company. FTX founder Bankman-Fried admitted on Thursday that he “f—ed up.”

Anthony Scaramucci, founder of SkyBridge Capital and short-time Trump communications director, flew to the Bahamas this week to help Bankman-Fried as an investor and friend. When Scaramucci got there, he says, it appeared beyond the point of a simple liquidity rescue. He said he didn’t see evidence of this mishandling when he and other investors first screened FTX as a potential business partner.

“Duped I guess is the right word, but I am very disappointed because I do like Sam,” Scaramucci said Friday morning on CNBC’s “Squawk Box.” “I don’t know what happened because I was not an insider at FTX.”

An FTX spokesperson did not immediately respond to CNBC’s request for comment on this story, including on Scaramucci’s remarks.

In a short period of time, FTX expanded into non-crypto elements of life, such as pop culture. For example, in the past Super Bowl, it aired a commercial featuring comedian Larry David, in which David turned down an opportunity to invest in crypto. “Ehh, I don’t think so. And I’m never wrong about this stuff. Never.”

GameStop is winding down its partnership with FTX, according to people familiar with the matter. Under the agreement, announced in September, GameStop sold FTX gift cards in select stores and while FTX promoted the retailer on its exchange.

The winding down of business agreements, like the one with GameStop, will likely continue following the FTX bankruptcy filing.

The Chapter 11 proceedings exclude the following subsidiaries: LedgerX LLC, FTX Digital Markets Ltd., FTX Australia Pty Ltd., and FTX Express Pay Ltd.

— CNBC’s Jack Stebbins and Lillian Rizzo contributed to this report.

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November 11, 2022

Tag: GameStop Corp

Nordstrom earnings top expectations, retailer says it’s winding down Canada operations

Cramer: Apple, Amazon, Microsoft and Google will fuel the next rally — but not in the usual way

Sam Bankman-Fried steps down as FTX CEO as his crypto exchange files for bankruptcy