Nordstrom's results reflect cautious consumer spending, echoing department store sector blues
Nordstrom reports a decline in sales and profits in its fiscal second quarter, reflecting cautious spending by shoppers.
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Posted 8/24/2023, 10:46:27 PM
komonews.com
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Macy's second quarter credit card sales declined due to high delinquencies and rising interest rates, highlighting the challenges facing US consumers and sending warnings to other retailers, causing investors in retail stocks to be cautious.
Nordstrom exceeds sales and earnings expectations but maintains caution for the future, as revenue is expected to decline and the company faces challenges in its turnaround efforts.
Nordstrom's stock rose 6% after beating earnings and same-store sales estimates, despite reporting an 8.3% drop in sales attributed to the timing of its Anniversary Sale and the wind-down of its Canadian operations.
Nordstrom's CEO Erik Nordstrom addressed the issue of high theft losses, which have reached historical highs, during an earnings call, causing the company's shares to fall 4.3% despite better than expected sales and earnings, with overall sales dropping 8.3%.
Nordstrom executives stated that levels of theft at their stores have not exceeded expectations, despite a recent massive robbery at one of their locations, although they acknowledged that losses from theft are at historical highs and need to be addressed.
The flagship Nordstrom store in San Francisco is closing due to decreased sales, crime in the area, and changing shopping habits, prompting the city to plan for new concepts such as pop-up shops and a soccer stadium in downtown San Francisco.
Nordstrom shares plummeted over 10% as the retailer reported a sales drop, citing a decline in discretionary spending and record levels of retail theft.
The former CEO of Home Depot, Bob Nardelli, criticizes the Biden administration for contributing to a "lawless society" as rising theft and crime negatively impact retailers, with Nordstrom reporting a 7.9% sales decline in the second quarter and other major retailers also experiencing a surge in theft.
A number of retailers are attributing their lackluster profits to shrink, but the extent of the problem varies widely among companies and may not be as dire as some have suggested, with losses generally in line with the retail industry standard of 1% to 1.5% of sales, according to a CNBC analysis.
Grocery giant Kroger expects sales to decline in the second half of 2023 due to high prices, debt, and interest rates, adding further pressure on consumers.