Nordstrom Inc reported on Thursday that its sales and profits fell in its fiscal second quarter, joining its department store peers as they grapple with shoppers’ cautious spending.
But its results still topped Wall Street’s expectations. The upscale Seattle-based department store confirmed its annual financial forecast calling for lower sales for the year.
After initially rallying, its stock is down nearly 5% in aftermarket trading Thursday.
Nordstrom’s sales were affected by the timing of the company’s anniversary sale, with one week entering the third quarter this year compared to one day in 2022. Moreover, last year’s results included a quarter of all sales from its Canadian operations, which the company fell in June this year.
Nordstrom reported net income of $137 million, or 84 cents per share, for the quarter ended July 29. That compared to $126 million, or 77 cents a share, in the same period last year.
Total sales fell 7.9% to $3.77 billion from $4.09 billion in the quarter.
Analysts had expected 45 cents per share on $3.67 billion, according to FactSet.
Nordstrom said it has seen improvement in several areas. For example, both children’s and men’s clothing performed better than average in both Nordstrom and Nordstrom Rack stores. Women’s clothing has improved sequentially since the first quarter. The chain said inventories were down 18% from a year ago.
Nordstrom said it expects revenue to fall between 4% to 6% for this year compared to last year. It also expects earnings per share to be in the range of $1.80 per share to $2.20 per share for the year, excluding fees related to winding down its operations in Canada. Analysts expect $1.98 per share, according to FactSet.
Its results follow those of Kohl’s, which announced Wednesday that profits fell nearly 60% due to weak second-quarter sales. Macy’s said Tuesday it had to discount its spring merchandise to make room for fall and holiday merchandise in the face of weak customer spending.
The reports come as shoppers are still dealing with rising inflation and rising interest rates that are making it more expensive to get a car or home loan or take on credit card debt.
Macy’s also noted a faster-than-expected rise in credit card delinquencies, pointing to more financial pressures on shoppers in the second half of the year. Many stores point to uncertainty about the end of the student loan suspension period, which for once offered college students a little more financial breathing room.
Meanwhile, Gap, which operates stores under the same name as well as Banana Republic, Old Navy and Athleta, on Thursday reported earnings from last year’s loss despite an 8% drop in sales. The results were lower than Wall Street estimates.
The San Francisco-based company — which has been mired in sales distress for years and just appointed former Mattel executive Richard Dixon as its new chief executive — has seen declines across all of its brands.
Gap estimates that third-quarter net sales could fall in the low double-digit range. For this year, the company said it expects net sales to fall in the mid-single-digit range compared to a year earlier.
Gap stocks were little changed in aftermarket trading.