Department store operator Nordstrom Inc reported a drop in first-quarter sales at established stores and slashed profit expectations for the year, adding to the gloom in the department store sector.
Shares of the company, which sells apparel and cosmetics from premium brands such as Armani, Stella McCartney and Valentino, tumbled 14 percent in extended trading on Thursday.
“Our first quarter results were impacted by lower than expected sales,” said Co-President Blake Nordstrom. “In response, we have made further adjustments to our inventory and expense plans.”
Nordstrom‘s results follow dismal first-quarter reports by rivals Macy’s (M) and Kohl’s (KSS). Both reported lower-than-expected sales, dragging shares of retailers lower.
Department store operators have been hit in the past year as consumers choose to spend on smartphones and electronics, dining out and travel, and invest in assets such as vehicles and homes.
Nordstrom had to resort to heavy discounts to clear out unsold inventory in the first quarter, the company said.
The company cut its adjusted profit forecast for the year ending January 2017 to $2.50-$2.70 per share from $3.10-$3.35. Analysts on average were expecting $3.20.
For the first quarter, the company’s net income fell by nearly two-thirds to $46 million, or 26 cents per share, in the first quarter ended April 30.
Total revenue rose 1.1 percent to $3.25 billion, but came in short of the average analyst estimate of $3.28 billion, according to Thomson Reuters I/B/E/S.
Sales at Nordstrom stores open at least a year fell 1.7 percent. Analysts polled by research firm Consensus Metrix had expected sales to remain flat.