Nordstrom reported ugly third-quarter earnings results on Thursday, and the stock got wrecked.
Shares fell by as much as 16% in afternoon trading on Friday.
The upscale retailer reported earnings per share of $0.42, missing Bloomberg’s consensus estimate of $0.72. The company said this reflected transaction costs related to the $2.2 billion sale of its credit-card portfolio to TD Bank in October.
Sales rose 6% in the third quarter to $3.3 billion.
Comparable sales, or sales at stores open for at least one year, rose 0.9%, missing the forecast for growth of 3.6%.
So we have yet another retailer reporting disappointing results. Macy’s, America’s largest department-store company, on Wednesday reported sales that were below expectations, with a lower outlook for the fourth quarter.
As Macy’s shares plunged after the earnings results, Nordstrom and Kohl’s shares also fell. Apparel retailers are facing a warmer-than-usual holiday season, meaning clothes for the fall season may not sell as early as before, according to analysts.
And foot traffic to malls has been declining.
Nordstrom lowered its outlook. It now sees full-year sales rising 7.5% to 8% from a previously guided range of 8.5% to 9.5%.
“Tourism weakness, warm weather, a focus on experiences/entertainment, consumers purchasing big ticket items (autos/furniture), and the Amazon effect have all been excuses for weakness across retail over the past few weeks,” wrote Deutsche Bank analysts in a client note on Thursday.
Nordstrom’s “management cited none of these factors, instead highlighting a meaningful slowdown in transactions across all formats, across all categories, and across all geographies beginning in August that has yet to recover. With a superior business model, in our view, that is half high-end dept. store, 30% off-price, and 20% online, this level of deceleration (from mid to single-digit same-store sales to ~1%) is a potential cautionary tale of the U.S. consumer’s health.”
Here’s a chart showing the drop in shares, which have fallen 32% year-to-date: