Investors heavily sold off shares of Seattle department store chain Nordstrom Inc. (NYSE:JWN) November 13 following a weak earnings report and a reduced outlook thanks in part to warmer weather during the quarter.
Shares sunk 20.5% lower and hit US$50.43, a level not seen since mid-2012.
The upscale retailer store chain reported after the close on November 12 that it earned US$0.57 per share on US$3.33 billion in revenue in the quarter that ended October 31. That was far below the analyst consensus estimate of US$0.72 cents per share on $3.37 billion in revenue.
This was the first quarter for which sales from the company’s 230,000-square-foot Vancouver store, which opened September 18, was included in earnings results. That store, according to retail analyst and Retail Insider Media Inc. owner Craig Patterson, is expected to be one of the 323-store chain's best three performing stores.
He believes sales at the Vancouver store have so far exceeded expectations.
“Part of the issue for Nordstrom is that, as has been the case for other retailers, the warmer weather [in the east and mid-west] during the quarter was extremely unhelpful to sales of fall and winter apparel,” added Conlumino analyst Carter Harrison.
“This also had the knock-on effect of reducing customer traffic to stores, which impacted on several other merchandise categories.”
Weather in much of the U.S., where Nordstrom has most of its stores, was warmer and wetter in October.
Nordstrom reduced its annual outlook for net sales increases to between 7.5% and 8%, down from between 8.5% and 9.5%. The company now sees its full-year earnings per share to be at between $3.30 and $3.40. That compares with previous guidance of between $3.85 and $3.95.
(Image: After hours chart of Nordstrom (NYSE:JWN) on November 12 at 3:10 p.m. Pacific Time)
Another upscale department store, Macy’s (NYSE:M), similarly, before the opening bell on November 11, released weak earnings and, in part, blamed the weather.
Investors then pushed Macy's shares down almost 14% by the end of the day – the worst percentage decline for Macy’s since 2008.
The company had the opposite weather problem last spring. It opened its Ottawa store in March and filled the location with spring fashions, not realizing that, in Ottawa, spring weather does not arrive until at least May.
