Nordstrom Inc. (NYSE:JWN) Q4 2022 Results Conference Call March 2, 2023 4:45 PM ET

Company Participants

Sara Penner - Investor Relations

Erik Nordstrom - Chief Executive Officer

Pete Nordstrom - President & Chief Brand Officer

Michael Maher - Chief Accounting Officer

Conference Call Participants

Brooke Roach - Goldman Sachs Group

Matthew Boss - JPMorgan

Noah Zatzkin - KeyBanc

Blake Anderson - Jefferies

Ed Yruma - Piper Sandler

Oliver Chen - TD Cowen

Operator

Greetings, and welcome to the Nordstrom Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. As a reminder this conference is being recorded.

I'll turn the call over to Sara Penner, Manager of Investor Relations for Nordstrom. You may now begin.

Sara Penner

Good afternoon, and thank you for joining us. Before we begin, I want to mention that we'll be referring to slides, which can be viewed in the investor relations section on nordstrom.com. Our discussion may include forward-looking statements, so please refer to the slide with our Safe Harbor language.

As a reminder, we are here today to discuss our business and fourth quarter performance, and we will not be taking questions on other matters. Participating in today's call are Erik Nordstrom, Chief Executive Officer, Pete Nordstrom, President and Chief Brand Officer, and Michael Maher, interim Chief Financial Officer, who will provide a business update and discuss the company's fourth quarter performance.

And now I'll turn the call over to Erik.

Erik Nordstrom

Thank you, Sara, and good afternoon, everyone. Thank you for joining us today. For the fourth quarter, we delivered net sales of $4.2 billion and earnings per share of $0.74. Looking back on the fiscal year, revenue increased 5% from 2021, and adjusted EBIT margin was in line with last year at 3.3%.

We saw customers starting to pull back in late June, primarily in Nordstrom Rack, and this trend continued through the holiday season. Across both banners the softening trend was more pronounced in customers with lower income profiles. Given the uncertain environment we are executing with agility, we took action starting in Q3 to clear excess inventory and optimize our product mix.

As a result, we are now in a much healthier position with inventory levels down 15% from last year and in line with 2019 levels. Well, this was the right strategy to better position our inventory levels for 2023, we implemented more markdowns than we had initially planned to achieve our goal. This was compounded by the softening trend, excess inventory levels and promotional intensity in our sector. As a result, our margins were lower than expected in the fourth quarter.