Seattle-based department store Nordstrom Thursday saw shares tumble 20% after a Q3 report that badly missed estimates.
Q3 sales rose 6.6% to $3.2 billion and same-store sales rose 0.9%. Profit fell to $81 million, compared with $142 million year-over-year. Earnings were hurt by Nordstrom’s sale of its credit-card business to Toronto-Dominion Bank.
The retailer is forecasting full-year profits of $3.40 to $3.50 a share, below its earlier guidance of a $3.70 to $3.80 per-share increase, and forecasting full-year sales growth between 7.5% to 8%, below its earlier forecast of 8.5% to 9.5%. Same-store sales are projected to rise 2.5% to 3%, below its earlier forecast of 3.5% to 4.5%.
Nordstrom said Thursday that its troubles began in August, when sales across all categories began to slow and stayed tepid through the quarter. The sales dips have been seen at its flagship stores as well as its off-price Nordstrom Rack locations and online.
The retailer said that fewer people are buying apparel, and that discounts have helped it avoid the inventory buildup plaguing other retailers.
“It’s just a traffic thing,” president of stores Jamie Nordstrom said. “We’ve got less people buying clothes this quarter than we expected. And there’s really nothing else to point to.”
The results serve to reiterate the particular trouble experienced by department stores. Macy’s Wednesday reported Q3 results described by CEO Terry Lundgren as a “tough” one, with sales decreases he said would entail heavy discounts this holiday season.
“You wonder if any department store can afford to be a department store any more unless they’re high end,” retail futurist Doug Stephens told Retail Dive Thursday. “Look at J.C. Penney, still dying a slow death. And Macy’s for all their bravado about omnichannel, still their sales are underwhelming.”
While Stephens pointed to Nordstrom as one department store that’s doing better, Thursday’s results show that even Nordstrom is stumbling. Stephens, author of "The Retail Revival: Re-Imagining Business for the New Age of Consumerism" and the Retail Prophet blog, pointed to Irish department store Arnotts as a department store that has successfully brought the excitement and successful of the model’s heyday to today.
“Arnotts is a high-end department store, and it was beautiful,” he said. “It was a really great experience, just really well merchandised, with great product assortments and great people to help you.”
Stateside, Stephens believes that Nordstrom does have the fundamentals, though he was speaking before the retailer’s report was released.
“Nordstrom’s service proposition is still excellent,” he said. “The service is tremendous, the assortment is really good, they have good buying principals, and, at the same time, they’re technology savvy.”