Should Nordstrom Close Stores

Nordstrom Inc. (NYSE: JWN) shares were beaten down after its missed earnings for its most recent quarter. Revenue rose a tiny amount, from $4.38 billion in the same period last year to $4.44 billion. Unfortunately, net income dropped to $193 million from $248 million. The company’s forecast for the upcoming period was lackluster at best. One has to ask if, with sales going nowhere, Nordstrom is better off to shutter underperforming stores as the overall brick-and-mortar retail industry continues to disintegrate.

Nordstrom is doing the opposite. It is expanding in certain large markets. These include Philadelphia; Washington, D.C.; Boston; Seattle; and Toronto. Nordstrom’s store cost, according to its earning statement, was flat year over year. Also, Nordstrom’s comment about e-commerce sales was so brief that one has to assume the results are not meaningful. Other retailers, that have been successful online, brag about results.

Inevitably, any retailer with 380 stores has to have some that underperform the average. Brick-and-mortar retailers that are not expanding rapidly need to get out in front of an industry that cannot survive as it is currently constituted.

Wall Street did not like Nordstrom’s results. It also should not like its insistence that physical stores are the wave of the future.