Nordstrom Inc. (NYSE: JWN) shares plummeted more than 7% Wednesday after the retailer said sales at its full-price stores were “below expectations” this holiday season and that it would need promotions to get rid of excess inventory.
The news, reported Tuesday evening, resulted in two Wall Street analysts downgrading Nordstrom’s stock, calling out the weak trends at the Company’s core department store business. Nordstrom’s off-price Rack stores, meanwhile, have been performing more in line with expectations.
Goldman Sachs downgraded Nordstrom to neutral from buy and has removed the stock from its Americas Conviction List. “We have fading confidence in the outlook for the core department store business, and see choppy gross margins as likely offsetting good news on costs,” the firm said in a note to clients Tuesday evening.
Telsey Advisory Group downgraded shares to market perform from outperform. “The fact that traffic decelerated to such a large degree at the full-price stores without a specific rationale creates more uncertainty as compares become more challenging,” Dana Telsey, Chief Executive Officer and Chief Research Officer at Telsey Advisory, said.
In a press release, Nordstrom said it now expects its diluted earnings per share for fiscal 2018 to fall on the low end of a previously estimated range of USD 3.27 and USD 3.37.
Sales open at its stores open for at least 12 months were up 1.3% overall for the nine weeks ended Jan. 5 compared with a year ago, the Company said. Off-price same store sales were up 3.9% during that time frame, on par with performance earlier in the year and in-line with expectations. Full-price same store sales, however, were up only 0.3%, “reflecting softer traffic in stores,” Nordstrom said.
The Company said online sales were up 18% during the holiday period from a year ago and accounted for 36% of total sales.
Nordstrom is set to report fourth-quarter and full-year earnings on Feb. 28.