Shares of Nordstrom fell Thursday, after the department store chain said it was hurt by weak sales and a lot of markdowns during the holiday season.
The retailer said net sales dropped 3.5% for the nine-week holiday period that ended Dec. 31 compared with the year-ago period. Net sales decreased 1.7% for its namesake banner and 7.6% for its off-price banner, Nordstrom Rack.
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Nordstrom cut its earnings and margin expectations for the fiscal year, which ends in late January. It said revenue growth for the fiscal year will be at the low end of its previous announced range of 5% to 7%. It said adjusted earnings per share, excluding the impact of potential share buybacks, will range between $1.50 and $1.70. That compares with its previous outlook of $2.30 to $2.60.
With the slashed guidance, Nordstrom becomes the latest retailer to flash warning signs about the consumer and preview a tougher year ahead. Earlier this month, Macy’s said holiday-quarter sales would come in at the lower end of its expected range. Lululemon also warned this month that its margins got squeezed during the holiday season, as excess merchandise and price-sensitive shoppers led to more discounts.
In a news release, Nordstrom said it had to mark down merchandise more than expected to clear through excess inventory. Plus, the company said, shoppers did not spend as freely as in previous holiday seasons.
“While we continue to see greater resilience in our higher income cohorts, it is clear that consumers are being more selective with their spending given the broader macro environment,” CEO Erik Nordstrom said in a news release.
While deeper discounts hurt profits, he said Nordstrom will “enter 2023 in a stronger position as we prioritized starting the new fiscal year with clean inventory levels.”
The company expects year-end inventory levels to be down by a double-digit percentage compared with last year and roughly in line with 2019 levels.
Nordstrom will report fourth quarter results March 2.