Nordstrom stock tanks after retailer lowers outlook for the year

Nordstrom Inc. stock fell more than 10% in an extended session on Tuesday after the retailer beat expectations for its second quarter but called for lower sales and gains for the year, warning that in June Foot traffic dropped “significantly”, especially its discount Rack store at Nordstrom, and its inventories are in need of tweaking.

Nordstrom JWN,
said it earned $126 million, or 77 cents per share, in the second quarter, compared to $80 million, or 49 cents per share, in the year-ago period.

Adjusted for one-time items, including costs with the discontinuation of Trunk Club personal-shopper service, the retailer earned 81 cents per share.

Sales rose 12% to $3.99 billion, up from $3.57 billion a year earlier.

Analysts polled by FactSet expect the retailer to report earnings of 80 cents per share on sales of $3.96 billion.

“While our quarterly results were in line with our previous outlook, customer traffic and demand resumed primarily at Nordstrom Rack in late June,” Chief Executive Eric 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.”

Nordstrom guided for 2022 revenue growth of between 5% and 7%, compared to its previous expectation of growth of between 6% and 8%. It also called for adjusted EPS to be between $2.30 and $2.60 for the year, up from an earlier forecast of adjusted EPS of between $3.20 and $3.50.

President Pete Nordstrom said Nordstrom will “aggressively resize our inventory” in the second half of the year and invest in supply-chain and business improvements for 2023 and beyond.

Nordstrom’s stock has outperformed the broader market, rising about 2.3% this year. This is in contrast to a loss of about 13% for the S&P 500 index SPX,
in 2022.


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