Nordstrom (NYSE: JWN) shares fell more than 7% on Wednesday, after the retailer said its full-store prices were “below expectations” this holiday season and that it would need to use promotions to get rid of excess inventory, as per CNBC.
On Tuesday evening the retailer reported that it now expects its diluted earnings per share for fiscal 2018 to fall on the low end of a prior range of USD 3.27 to USD 3.37. Shares were down more than 3% in after-hours trading on the news.
According to Yahoo Finance, The Company said sales at its stores open for at least 12 months were up 1.3% overall for the nine weeks ended Jan. 5th, compared with a year ago. It said off-price same-store sales were up 3.9% during that time-frame, on par with performances earlier in the year and in-line with expectations. Nordstrom said online sales were up 18% during the holiday season period from a year ago and accounted for 36% of total sales.
Goldman Sachs downgraded Nordstrom to neutral from buy and has removed the stock from its “Americas Conviction List.” “We have fading confidence in the outlook for the core department store business, and see choppy gross margins as likely offsetting good news on costs,” the firm said in a note to clients Tuesday evening.
The results from Nordstrom comes days after a handful of retailers including Kohl’s and Macy’s reported disappointing holiday sales. Macy’s Chief Executive Officer Jeff Gennette said traffic at stores fell after Black Friday and took longer than expected to pick back up. Macy’s stock plummeted last Thursday when it delivered that news to analysts and investors.
The dismal results have some analysts wondering just how bad department stores have it today, as more spending moves online and foot traffic shifts away from stale shopping malls, as stated by CNBC.
“We see Bon-Ton’s filing [for bankruptcy] as a cautionary tale of what happens department stores become too highly leveraged while falling too far behind the competitive pack,” Moody’s analyst Christina Boni said in a note to clients. The market’s growing impatience will be putting a brighter spotlight on struggling companies like J.C. Penney (NYSE: JCP) during 2019.
Nordstrom is set to report fourth-quarter and full-year earnings on Feb. 28.