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 offprice 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 266 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 41 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 kohls 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 smallerformat stores building its offprice rack business and ecommerce 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 brickandmortar stores were closed for two quarters due to covid restrictions in the spring sales were later hurt on the west coast as covid19 cases surged across the region into the fall and winter prompting state officials to renew restrictions nordstrom wont report its fourthquarter 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 longerterm nordstrom said it expects revenue to grow at a low singledigit pace annually from 2019 levels while profits continue to grow at a rate faster than sales in 2019 nordstrom reported net sales of 151 billion marking a 22 decline from the prior year during the virtual presentation chief executive erik nordstrom said the company is targeting 17 billion of annual revenue in the medium term we have recently engaged in a robust evaluation of our addressable market he said and we see significant opportunity to expand the customer base that we serve with a more affluent customer base nordstrom is seen as one of the strongest department store chains left standing in the united states its stores tend to be in betterperforming malls and there are fewer of them which has helped control its fixed costs at the end of 2019 nordstrom said 95 of its fullline department stores were located in socalled arated malls while most of its rack locations were in offmall shopping centers its rack business which competes with the likes of tj maxx and ross stores has helped nordstrom reach shoppers who are more price conscious but still want designer brands at nordstrom rack we have historically focused on trendy fashion lovers who are looking for great value with a high brand focus  but we have not prioritized priceoriented shoppers who look for deals and value first nordstrom said the ceo added that the rack business is on track to drive 2 billion in incremental revenue over the next five years nordstroms stock has fallen about 3 over the past 12 months to a market value of 59 billion while shares of macys are down a little more than 10 bring its value to 46 billion kohls is up almost 9 from a year ago a boost that has given it the biggest market cap of the three at 78 billion earlier thursday kohls preannounced that its holidayquarter revenue is expected to fall 10 but the company said its seeing sales strengthen since the start of the new year in the department store space rivals like jc penney and neiman marcus filed for bankruptcy protection last year macys and penney have also closed hundreds of stores while nordstrom shuttered just 16 locations in 2020 nordstroms earlier investments online have paid off and boosted performance its close to having half of its business come from digital and thats far ahead of rivals macys for example said its digital sales made up just 26 of total sales in 2019 and kohls said its digital business represented 24 of net sales in 2019 wed always thought about this and talked about this was going to happen at some point nordstrom chief financial officer anne bramman said in an interview it has just accelerated with the environment that were in right now nordstrom also envisions a bigger role for rack in the future bramman said the company expects rack to make up half of its sales in the near future compared with about a third at the end of its most recently reported fiscal year its clear the company aims to gain a larger presence off mall with even arated mall values tumbling in recent years we continue to believe that nordstrom has the potential to take profitable market share over time as we see the business as wellpositioned relative to peers telsey advisory group founder dana telsey said in a note to clients ahead of thursdays meeting in our view nordstrom continues to operate in an offprice channel that has legs for growth  and a profitable digital presence that continues to grow nordstrom rack president geevy thomas said the rack expects 45 of its sales come from online in the future thanks to investments in services like curbside pickup meantime the brand will continue to open locations in new markets and invest in key categories like footwear that drive shopper traffic another strategy that nordstrom plans to use to win sales is to offer shoppers more selection nordstrom said it plans to increase the items it offers to more than 15 million from roughly 300000 today bramman explained the retailer plans to ramp up some of its private fashion labels as it continues to work with new and emerging brands and expanding our partnerships with some of our bigger brands were executing a new playbook but its a lot of foundations that have already been put in place bramman said