Warning: Bleak revenue outlook for 2024, Nordstrom (JWN.US) drops nearly 10% after hours.

After the US stock market closed on Tuesday, Nordstrom (JWN.US) announced fourth-quarter results that exceeded expectations. However, the retailer is not optimistic about the outlook for the next year, which led to a nearly 10% decline in the stock after hours. The company stated that it plans to open new Rack discount stores in the coming year and increase online and physical store sales. However, the company mentioned that overall revenue growth, including retail and credit card, is expected to be in the range of -2% to 1% for the year. This forecast includes over 1% loss caused by the missing week in this fiscal year. The company also expects a decrease in credit card business revenue for the year. Earnings per share are expected to be between $1.65 and $2.05, higher than the previous fiscal year's earnings per share of $1.51. Like other retailers, Nordstrom also faces pressure from consumers becoming more selective and price-conscious in response to inflation and rising interest rates. The company also faces some company-specific issues, such as lagging sales at its Rack discount stores and excessive inventory errors, leading to larger markdowns. In the fourth quarter, Nordstrom's revenue increased by about 2% to $4.42 billion, exceeding the market expectation of $4.39 billion. The company attributed approximately $190 million of the sales to the extra week in the fiscal year. Net profit increased from $1.19 billion in the same period last year to $1.34 billion, with earnings per share at 82 cents compared to 74 cents in the previous year. Adjusted earnings per share were 96 cents, exceeding the market expectation of 88 cents. Revenue from Nordstrom's namesake stores fell by 3% to $2.87 billion (including a 4.1% growth from the extra week in the fiscal year), below analysts' average expectations. The company's closure of its Canadian business had a certain impact on sales, leading to a more than 3% decline in net sales. The company announced a year ago that it would close its stores and online business in Canada. Rack discount stores The company's discount brand Nordstrom Rack performed strongly during the holiday season. Its net sales increased by 14.6% to $1.43 billion, including a 5.8% growth from the extra week this year, surpassing market expectations. Nordstrom CEO Erik Nordstrom stated during the earnings conference call that in the fourth quarter, more shoppers visited the Rack website and made purchases on the site. He mentioned that even without the boost from new store openings, the sales of this discount chain brand were growing, with comparable store sales increasing in the single digits. Nordstrom opened 19 new Rack stores this fiscal year, bringing the total number of stores to 258. Including 93 Nordstrom flagship stores, the company had 359 stores at the year's end, only one more than last year-end. The retailer plans to open 22 new Rack stores by 2024. During the earnings call, Erik Nordstrom said that the Rack stores are "the growth engine of our company" and the biggest source of acquiring new customers. He mentioned that about a quarter of Rack's retained customers transitioned to the Nordstrom namesake brand within four years. The company did not announce plans to open new stores under its flagship brand, but Erik Nordstrom said that these stores are an important part of the company's business. He said, "Some of the fastest-growing stores in the past year have been our large flagship stores in cities. New York, in particular, has shown truly strong growth."