Nordstrom CEO Erik Nordstrom on Covid's business impact

Erik Nordstrom, CEO of Nordstrom, joins "Squawk on the Street" to discuss the effect Covid-19 has had on the business. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Nordstrom shares tumbled Thursday as the department store chain delivered a disappointing sales outlook for the year, and said it plans to shift more of its business toward off-price.

Nordstrom said it expects revenue to rise more than 25% in fiscal 2021 from the prior year, with roughly half of its sales coming from its digital business. Last year, the department store chain rang up about a third of its sales online.

The anticipated 2021 growth comes in a bit lower than the 26.6% revenue increase expected by analysts, according to a Refinitiv survey.

The company also anticipates earnings before interest and taxes to be positive in fiscal 2021, it said ahead of an virtual meeting with investors Thursday.

Nordstrom shares were halted ahead of the news release, up 4.1%. Having resumed trading, shares were recently down more than 5%, as investors processed the fresh forecast.

“Nordstrom had become a retail reopening rally favorite among investors,” BMO Capital Markets analyst Simeon Siegel said. Its stock had runup more than 16% year to date, more than Kohl’s, Best Buy, Gap and a number of other retailers.

With shoppers changing their purchasing behaviors in the wake of the coronavirus pandemic, Nordstrom said it plans to focus its investments on smaller-format stores, building its off-price Rack business and e-commerce, as it tries to win back old customers and reach new ones.

While the pace of growth is staggering compared with previous years, Nordstrom will be lapping 2020, when its brick-and-mortar stores were closed for two quarters due to Covid restrictions in the spring. Sales were later hurt on the West Coast, as Covid-19 cases surged across the region into the fall and winter, prompting state officials to renew restrictions.

Nordstrom won’t report its fourth-quarter results until March 2. But the company has reiterated its previous outlook calling for sales to be down in the low 20% range compared with a year earlier. Earnings before interest and taxes are still expected to be positive, too.

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