Nordstrom Inc missed estimates for quarterly profit on Tuesday, and signaled supply-related problems at its off-price stores heading into the holiday season, sending its shares down 23.5% in extended trading.
Unlike Macy's Inc and T.J. Maxx parent TJX Cos Inc, which have touted strong inventory levels ahead of the crucial holiday quarter, Nordstrom is grappling with supply-chain logjams, resulting in shortages of key items such as women's shoes and clothing at its off-price Rack stores.
The Seattle-based company also reported a sharp rise in costs in the quarter as it spent more on staffing its stores amid labor shortages in the United States that have forced retailers to increase wages and hand out hefty bonuses.
Big-box retailers Walmart Inc and Target Corp posted a drop in their quarterly margins last week, reeling under heightened labor and supply chain costs.
While third-quarter net sales at its Nordstrom stores rose 3%, compared with 2019 levels, its off-price Rack stores posted a decline of 8%.
"We're taking action to improve performance at Nordstrom Rack, including optimizing inventory levels," Chief Executive Officer Erik Nordstrom said.
Nordstrom maintained its annual revenue growth forecast of more than 35%, while rival Macy's last week raised its sales expectations to as much as 40%.
Nordstrom's total revenue rose about 18% to $3.64 billion in the third quarter, but still failed to catch up with its pre-pandemic levels. Analysts were expecting revenue of $3.55 billion, according to Refinitiv IBES.
The company posted a profit of $64 million, or 39 cents per share, for the quarter ended Oct. 30, missing analysts' estimate for a profit of 56 cents.
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