Shoppers exit Nordstrom at the King of Prussia Mall on December 11, 2022 in King of Prussia, Pennsylvania.
Mark Makela | Getty Images
Nordstrom’s shares fell on Thursday after the department store chain said it was impacted by weak sales and many discounts during the holiday season.
The retailer said net sales fell 3.5% during the nine-week holiday period, which ended Dec. 31, compared to the same period last year. Net sales declined 1.7% for its eponymous banner and 7.6% for its off-price banner, Nordstrom Rack.
Nordstrom lowered its earnings and margin expectations for the fiscal year ending in late January. Revenue growth for the fiscal year will come in at the low end of the previously announced 5% to 7% range. Adjusted earnings per share, excluding the impact of potential share repurchases, will be between $1.50 and $1.70. In comparison, the previous outlook was $2.30 to $2.60.
With the trimmed forecast, Nordstrom becomes the latest retailer to flash warning signs about the consumer and anticipate a tougher year. Earlier this month, Macy’s said that sales for the holiday quarter would come in at the lower end of its expected range. Lululemon also warned this month that its margins were being squeezed during the holiday season, as excess merchandise and price-conscious shoppers led to more discounts.
In a press release, Nordstrom said it had to devalue goods more than expected to shed excess inventory. Also, the company says, shoppers weren’t spending as freely as they had in previous holiday seasons.
“While we continue to see greater resilience in our higher-income cohorts, it’s clear that given the broader macro environment, consumers are becoming more selective about their spending,” CEO Erik Nordstrom said in a release.
While higher rebates hurt profits, he said Nordstrom “will enter 2023 in a stronger position as we have prioritized starting the new fiscal year with clean inventory.”
The company expects year-end inventories to be down a double-digit percentage year-over-year and to be around 2019 levels.
Nordstrom will report fourth-quarter results on March 2nd.