Shoppers leave Nordstrom at the King of Prussia Mall on December 11, 2022 in King of Prussia, Pennsylvania.
Mark Makela | Getty Images
Shares of Nordström fell on Thursday, after the department store chain said it was hit by weak sales and numerous markdowns over the holiday season.
The retailer said net sales fell 3.5% for the nine-week holiday period that ended Dec. 31 from the year-ago period. Net sales fell 1.7% for its namesake banner and 7.6% for its off-price banner, Nordstrom Rack.
Nordstrom lowered its earnings and margin expectations for the fiscal year, which ends in late January. He said revenue growth for the year would be in the low end of the previously reported range of 5% to 7%. He said adjusted earnings per share, excluding the impact of potential stock buybacks, would be between $1.50 and $1.70. This compares to its previous outlook of $2.30-$2.60.
With the forecast reduced, Nordstrom becomes the latest retailer to show consumer warning signs and predict a tougher year ahead. Earlier this month, Macy’s said holiday quarter sales would be at the lower end of its expected range. lululemon also warned this month that its margins have tightened over the holiday season as overstock and price-sensitive buyers drive more discounts.
In a press release, Nordstrom said it had to reduce merchandise more than expected to eliminate excess inventory. Also, the company said, shoppers weren’t spending as freely as in previous holiday seasons.
“As we continue to see greater resilience in our high-income cohorts, it’s clear that consumers are more selective with their spending given the broader macroeconomic environment,” CEO Erik Nordstrom said in a statement. Press.
As deeper discounts hurt earnings, he said Nordstrom “will enter 2023 in a stronger position as we prioritize starting the new fiscal year with clean inventory levels.”
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 release its fourth quarter results on March 2.