- Nordstrom stock fell sharply Wednesday after third-quarter earnings fell short of Wall Street’s view.
- Earnings of $0.39 a share were well below the $0.57 a share analysts anticipated.
- Sales were ahead of Wall Street’s targets but the company said it needs to improve profitability and market share.
Nordstrom stock tumbled Wednesday after third-quarter earnings missed expectations as the upscale retailer struggled with rising labor costs and soft inventory levels at its Nordstrom Rack unit.
Late Tuesday, the company posted earnings of $0.39 a share, less than the $0.57 cents a share analysts polled by FactSet had anticipated. Revenue of $3.64 billion, however, was ahead of Wall Street’s $3.54 billion projection.
Shares sank as much as 28% to $23 during premarket trade. Nordstrom stock this year through Tuesday had been up modestly, by 2.3%.
Nordstrom said it’s on track to reach the financial targets it made earlier this year. However, “when we look across the landscape, we need to deliver more,” and increase market share while delivering greater profitability, CEO Erik Nordstrom said during the company’s earnings call late Tuesday.
The company said selling, general and administrative expenses as a percentage of net sales increased 230 basis points from a year earlier to 34% primarily because of labor cost pressure, partially offset by leverage on higher sales.
Sales at Nordstrom Rack, which offers merchandise at discounted prices, rose to $1.19 billion from a year earlier but was still 8% below pre-pandemic levels seen in the third quarter of 2019. Nordstrom Rack was “challenged” by low inventory levels in premium brands and key categories such as women’s apparel and shoes, the company said Tuesday.
Nordstrom reaffirmed its fiscal 2021 outlook for revenue, including retail sales and credit card revenues, to increase by more than 35% compared with fiscal 2020. While Nordstrom backed its view, rival retailer Macy’s last week raised its yearly outlook.