Nordstrom on Thursday reported decrease gross sales and earnings for the vacation quarter, though earnings topped Wall Avenue’s expectations.

The corporate stated it expects gross sales to say no within the new fiscal 12 months, reflecting partly its choice to wind down its Canadian operations.

“We entered Canada in 2014 with a plan to construct and maintain a long-term enterprise there. Regardless of our greatest efforts, we don’t see a practical path to profitability for the Canadian enterprise,” CEO Erik Nordstrom stated in a launch Thursday.

This is what the division retailer reported for the fiscal fourth-quarter in contrast with what analysts had been anticipating, based mostly on Refinitiv estimates:

• Earnings per share: 74 cents vs. 66 cents anticipated
• Income: $4.32 billion vs. $4.34 billion anticipated

Nordstrom has struggled with slower gross sales, extra markdowns and scrutiny from a outstanding activist investor. Its internet revenue within the interval ended Jan. 28 fell to $119 million, or 74 cents per share, from $200 million, or $1.23 per share, a 12 months earlier.

For the brand new fiscal 12 months, Nordstrom expects income to fall 4% to six%. It additionally projected EPS of 20 cents to 80 cents for the 12 months.

Michael Maher, interim chief monetary officer, stated Nordstrom factored a more difficult financial backdrop and better prices into its year-ahead forecast.

“We count on that elevated inflation and rising rates of interest will proceed to weigh on client spending, particularly within the first half of the 12 months,” he stated on a name with traders. “We additionally anticipate persevering with inflationary strain on our bills particularly labor and transportation prices.”

He stated the outlook included an roughly 2.5-percentage-point detrimental influence from the wind-down of its operations in Canada, a enterprise that drove about $400 million in gross sales within the fiscal 2022 12 months.

As of Jan. 28, the corporate stated it had six Nordstrom shops and 7 Nordstrom Rack shops in Canada. Nordstrom stated it ceased its Canadian e-commerce platform Thursday. It expects to complete Canadian retailer closures in Canada by late June.

Even earlier than Nordstrom reported earnings, it minimize its forecast and informed traders that it had a tough vacation. In January, the division retailer chain stated its internet gross sales dropped 3.5% for the nine-week interval that ended Dec. 31 in contrast with the year-ago interval. Its internet gross sales declined sharply throughout that stretch at its off-price banner, Nordstrom Rack.

One of many causes for disappointing gross sales? Extra markdowns. Nordstrom stated it discounted merchandise greater than anticipated in November and December, so it might begin the fiscal 12 months with a more healthy stage of stock.

The corporate drew consideration and noticed its inventory soar in February, as activist investor Ryan Cohen purchased a big stake within the firm. Cohen, the chairman of GameStop and founding father of Chewy, is fascinated by utilizing that place to push for change — together with getting former Mattress Tub & Past CEO Mark Tritton off of Nordstrom’s board.

Cohen purchased, and later bought, a significant stake in Mattress Tub, after criticizing Tritton’s technique and pushing for change at that firm, too.

As of Thursday’s shut, Nordstrom shares are up greater than 19% this 12 months.

Learn the total Nordstrom earnings launch.