Nordstrom Inc. fell after reporting a tepid profit outlook, fueled by already simmering pessimism about the retail sector.
The company sees profit in the current year, excluding some items, of US$3.25 to US$3.50, the midpoint of which is below analysts’ average estimate of US$3.49. It projected sales will rise 1.5 per cent to 2.5 per cent. The company also made some management changes: it will transition from its co-president structure to a sole chief executive officer in Erik Nordstrom, and named Pete Nordstrom as president and chief brand officer.
Key Insights:
Nordstrom is trying to buck troubling trends for department stores by offering shoppers new services, including second-hand clothing sales and rental drop boxes. Down-market rivals J.C. Penney Co. and Macy’s Inc. reported sales declines in the fourth quarter, as both companies try to turn their businesses around as consumers shift online. “Through our customer focus, inventory efficiencies and expense discipline, we drove improvement in sales trends,” said CEO Erik Nordstrom.
Executives have been trying out new store formats, including a Nordstrom Local concept, which is now expanding to more cities. These locations don’t carry inventory and are devoted to services such as clothing fittings, styling appointments and product pickup and return. It’s also adding express services at Nordstrom Rack outlets.
The company said that its financial outlook doesn’t include any potential impact from the coronavirus. Investors can tune into the call at 4:45 p.m for more details.
Market Reaction:
Nordstrom shares fell as much as 12 per cent in late trading in New York before paring some of the loss. The company’s shares have fallen about 18 per cent this year.
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