Shoppers leave Nordstrom at King of Prussia Mall on December 11, 2022 in King of Prussia, Pennsylvania.
Mark Makela | Getty Images
Actions from Nordstrom fell on Thursday after the department store chain said it was hurt by weak sales and heavy discounting during the holiday season.
The retailer said net sales fell 3.5% for the nine-week holiday period ended Dec. 31 compared with a year earlier. Net sales were down 1.7% at the same-name banner and 7.6% at the lower-priced Nordstrom Rack banner.
Nordstrom lowered its profit and margin expectations for the fiscal year that ends in late January. It said revenue growth for the fiscal year would be at the lower end of a previously announced range of 5% to 7%. It said adjusted earnings per share, excluding the impact of potential share buybacks, would be between $1.50 and $1.70. That compares with his previous outlook of $2.30 to $2.60.
Shortened guidelines make Nordstrom the latest retailer to flash warning signs about consumer and a harbinger of a tougher year ahead. Earlier this month, Macy’s he said sales for the holiday quarter would come in at the lower end of the expected range. Lululemon it also warned this month that its margins were squeezed during the holiday season as excess merchandise and price-sensitive customers led to further discounting.
In a press release, Nordstrom said it had to reduce merchandise more than expected to clear excess inventory. Additionally, the company said shoppers were not spending as freely as in previous holiday seasons.
“While we continue to see greater resilience in our higher-income cohorts, it’s clear that consumers are becoming more selective in their spending given the broader macro environment,” CEO Erik Nordstrom said in a press release.
While deeper discounting hurts earnings, he said Nordstrom “enters 2023 in a stronger position because we prioritized starting the new fiscal year with clean inventory.”
The company expects year-end inventory levels to be down a double-digit percentage from last year and roughly in line with 2019 levels.
Nordstrom will report fourth-quarter results on March 2.