Nordstrom Inc. stock fell more than 10% in the extended session Tuesday after the retailer beat expectations for its second quarter but called for lower sales and profit for the year, warning that foot traffic dropped “significantly” in June, particularly in its discount Nordstrom Rack stores, and that its inventories need tweaking.
Nordstrom
JWN,
said it earned $126 million, or 77 cents a share, in the second quarter, compared with earnings of $80 million, or 49 cents a share, in the year-ago period.
Adjusted for one-time items, including costs with winding down its Trunk Club personal-shopper service, the retailer earned 81 cents a share.
Sales rose 12% to $3.99 billion, from $3.57 billion a year ago.
Analysts polled by FactSet expected the retailer to report earnings of 80 cents a share on sales of $3.96 billion.
“While our quarterly results were consistent with our previous outlook, customer traffic and demand decelerated significantly beginning in late June, predominantly at Nordstrom Rack,” Chief Executive Erik Nordstrom said in a statement.
“We are adjusting our plans and taking action to navigate this dynamic in the short term, including aligning inventory and expenses to recent trends.”
Last week, Walmart Inc.
WMT,
beat its recently lowered expectations for the second quarter, sending the stock higher, but the results came three weeks after the retail behemoth issued its second profit warning in two months, blaming those in part on offering markdowns to clear inventory.
Target Corp.
TGT,
also reported a profit miss last week, blaming it in part on the need to offer more markdowns.
Nordstrom guided for 2022 revenue growth of between 5% and 7%, compared with a previous expectation of growth between 6% and 8%. It also called for adjusted EPS between $2.30 and $2.60 for the year, from an earlier forecast of adjusted EPS between $3.20 and $3.50.
Nordstrom will be “aggressively right-sizing our inventory” in the second half of the year and also investing in supply-chain and merchandising improvements for 2023 and beyond, President Pete Nordstrom said.
Nordstrom stock has outperformed the broader market this year, up about 2.3%. That contrasts with losses of about 13% for the S&P 500 index
SPX,
in 2022.
