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Nordstrom eyes billions in new sales in a post COVID-19 recovery

Nordstrom (and most of retail, honestly) is very happy to put 2020 in the rearview mirror. The luxury department store is so over the tumultuous 12 months caused by the COVID-19 pandemic, it earns the honor as first retailer in 2021 to share a post-pandemic financial outlook.

At an investor day Thursday afternoon, Nordstrom (JWN) outlined 2021 sales growth of 25% and “positive” operating profits. Over the long-term, Nordstrom sees revenue growing by a low-single digit percentage from 2019 levels (pre-pandemic) and operating profits increasing at a faster pace of sales.

Although the growth expectations sound aggressive amid the current pandemic environment, Nordstrom CFO Anne Bramman thinks they are achievable.

“We thought we took a really pragmatic approach in some of the guidance that we gave. Clearly, having the stores open is part of the assumption — if you remember, in 2020, a good portion of our stores were closed in the first half,” Bramman — who also sits on the board of spice seller McCormick — told Yahoo Finance Live on the guidance for 2021.

Added Bramman, “We're seeing sequential improvement in our trends. And we have since the second half of the year as we saw stores reopen. And we're continuing to see that sequential improvement. We're seeing that as people think about the vaccine, we've seen that they really are focused on what they're wearing outside of the home. And we're also seeing that consumers continue to show appetite for shopping.”

Photo by: John Nacion/STAR MAX/IPx 2020 10/27/20 A view of people with masks on, walking past a Nordstrom Department Store in Midtown. New York City continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on October 27, 2020 in New York City. The fourth phase allows outdoor arts and entertainment, sporting events without fans and media production.

As part of its post pandemic life, Nordstrom sees a $3 billion to $4 billion recovery as people wander back out to stores and continue to shop online after the worst of the health crisis. Some $2 billion to $3 billion in sales are expected to be generated by various company initiatives, such as opening new off-price Rack stores, increasing the amount of online merchandise by 20 times and pushing harder into private label goods.

Despite the upbeat outlook, investors took a wait-and-see approach in the wake of Nordstrom’s investor day. Nordstrom shares were down about 6.5% from Thursday through Friday afternoon trading. Shares are down about 11% over the past year, per Yahoo Finance Premium data.

The cautiousness may stem from concerns on the near-term outlook for Nordstrom as the pandemic continues to rage on. It was just two weeks or so ago Nordstrom said sales for the nine-week period ended Jan. 2 fell 22% from a year ago amid challenging store traffic. Digital sales rose 23% from a year earlier. The company guided to operating margins falling by 500 basis points year-over-year due to the net sales drop.

“We were somewhat underwhelmed by the margin outlook,” wrote Deutsche Bank retail analyst Paul Trussell in a note to clients.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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