Shoppers leave Nordstrom at the King of Prussia Mall on December 11, 2022 in King of Prussia, Pennsylvania.
Mark Makela | Getty Images
Shares of Nordstrom fell Thursday, after the department store chain said it was suffering from weak sales and many discounts during the holiday season.
The retailer said net sales fell 3.5% for the nine-week holiday period ending Dec. 31 compared to the same period a year ago. Net sales were down 1.7% for its namesake banner and 7.6% for its off-price banner, Nordstrom Rack.
Nordstrom lowered its profit and margin expectations for the fiscal year, which ends at the end of January. It said sales growth for the fiscal year will be at the lower end of the previously 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 to the previous outlook of $2.30 to $2.60.
With the lowered guidelines, Nordstrom becomes the latest retailer to flash consumer warning signs and look ahead to a tougher year. Earlier this month, Macy’s said sales in the holiday quarter would be at the lower end of the expected range. Lululemon also warned this month that margins would come under pressure during the holiday season as excess merchandise and price-sensitive shoppers led to more discounts.
In a press release, Nordstrom said it had to mark down goods more than expected to clear excess inventory. In addition, the company said, customers were not spending 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 more selective with their spending given the broader macro environment,” CEO Erik Nordstrom said in a press release.
While bigger discounts hurt earnings, 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 double-digit compared to last year and roughly in line with 2019 levels.
Nordstrom will publish fourth quarter results on March 2.