Nordstrom sales slump ahead of holiday season
Results may make company’s quest to secure financing for a buyout more difficult
Nordstrom Inc. posted a worse-than-expected sales decline ahead of the holiday season, disappointing investors who’d hoped the upscale department-store chain was bucking the mall malaise.
Comparable sales turned negative, showing the previous quarter’s gain may have been fleeting rather than part of a sustained turnaround. The hurricanes that hit Florida and Texas also trimmed profit during the quarter ending on Oct. 28, the company said.
Nordstrom’s results are the latest blow for the beleaguered department-store industry, and they may make the company’s quest to secure financing for a buyout more difficult. Investors punished the company’s shares when it announced it was suspending efforts to take the company private.
The Nordstrom family put the plan on hold because lenders’ terms proved too demanding. Poonam Goyal, an analyst at Bloomberg Intelligence, said department-store results will be “unpredictable and volatile” in coming months as they implement new strategies for their physical stores, inventories and websites.
Department stores are heading into a crucial period as they scramble to adapt to the rapid growth of e-commerce and trends that seem to change on a dime, playing to the strengths of online retailers and fastfashion chains that keep inventories tight.
Nordstrom is responding by expanding its off-price chain Rack and adding more exclusive brands targeting younger shoppers.
Comparable sales, a key metric, fell 0.9 per cent in the quarter, deeper than analysts’ estimate of a 0.4-percent decline. The company also reduced its guidance for profit during fiscal 2017 to a maximum of $2.95 (U.S.) a share, down from the previous top level of $3 a share.
Nordstrom reported earnings of 67 cents a share in the third quarter. Analysts had predicted 63 cents on average.