Nordstrom’s first-quarter profit fell far more than Wall Street estimates as growth in its online sales was not enough to offset a sharp decline at its luxury stores.
The retailer on Friday reported earnings dropped 60% to 26 cents per diluted share on $3.25 billion in revenue. Analysts had expected earnings of 45 cents per share on $3.28 billion in sales, according to a Thomson Reuters consensus estimate.
On news of the earnings, Nordstrom shares tumbled more than 13% on Friday, closing at $39.16. The stock has fallen 21% so far this year and is now at its lowest level since August 2011.
While net sales were up 2.5% on the first quarter of 2015, comparable store sales as a whole were down 1.7% and full-line, or luxury, same-store sales fell 7.7%.
“It is clear that the retailer is struggling to maintain sales at its physical locations, especially at full-line Nordstrom stores,” Seeking Alpha said, adding that the decline at those stores was “even more concerning” because of the easy comparison with a year ago, when sales increased 0.5%.
Nordstrom.com’s sales grew 3.5% but that was down from 19.8% growth a year earlier. As Fortune reports, the company has long been a leader in e-commerce, being among the first to recognize the need to integrate stores and e-commerce, but it is now cutting some of its online product assortment.
“We are refining our online assortment through greater focus on key brands and categories while editing less profitable items,” CFO Michael Koppel said on Friday’s earnings call.
Nordstrom also reduced its guidance for 2016, forecasting that net sales would grow by 2.5% to 4.5% versus its previous estimate of 3.5% to 5.5%. It expects 2016 full-year earnings to be $2.50 to $2.70 a share against analysts’ projections of $3.20 a share.