Department store chain Nordstrom reported lower than expected first quarter sales and profit after markets closed May 12 and saw its share price plunge 17% in after-hours trading to five-year lows.
The Seattle-based company’s quarterly earnings were US$0.26 per diluted share on US$3.25 billion in revenue.
That’s down from US$0.66 per share in the same quarter a year ago although sales inched up from US$3.22 billion in the same quarter a year ago.
Analysts’ consensus estimate was for US$0.45 profit per share on US$3.28 billion in sales during the quarter.
The news comes on the heels of weak results from Macy’s (NYSE:M) as well as poor guidance. That pushed Macy’s share price down more than 15% Wednesday (May 11) to what was also a multi-year low.
While traditional department stores have been scraping multi-year lows, the star retailer this year has been Amazon.com Inc. (Nasdaq:AMZN), which reported strong earnings and has shares that keep hitting all-time high prices.
All this underscores digital disruption in retail and a move toward shopping online instead of in large department stores.
Analyst and Conlumino CEO Neil Saunders called Nordstrom’s results “dismal,” adding that for the first time in 25 quarters, the overall underlying sales have entered negative territory.
“Overall, discounting and margin erosion and weak sales conspired to drive down net income growth, which plunged by a worrying 64% over the same period last year,” Saunders said.
The 323-store Nordstrom’s most significant store opening in the past year was last September in Vancouver at Pacific Centre.
That store’s general manager, Chris Wanlass, told Business in Vancouver soon after the opening that he believes that the Vancouver location has the potential to be the chain’s top revenue generator despite being slightly smaller than the current No. 1 store, in Bellevue, Wash., in square footage.
“Vancouver is one of our five biggest stores by size but its efficient use of space makes it feel almost as large as Bellevue,” Wanlass said.
Click here to read a Business in Vancouver profile of Chris Wanlass.
