Nordstrom (JWN) shares are facing a decline in premarket trading after the company fell short of second quarter sales expectations. The company reported revenue of $3.62 billion for the quarter, which is below the consensus estimate of $3.68 billion. Net sales also recorded an 8.3% decrease compared to the same period last year. However, Nordstrom’s earnings per share came in at $0.81, surpassing the analyst estimate of $0.45. Despite the positive earnings, the stock experienced a decline of more than 1% during premarket trading on Friday.
Nordstrom CEO Erik Nordstrom expressed satisfaction with the company’s progress in improving its operating model and achieving solid results. The company has focused on improving Nordstrom Rack performance, enhancing inventory productivity, and streamlining its supply chain. Nordstrom also reaffirmed its fiscal 2023 revenue and adjusted earnings outlook. The company anticipates its earnings per share for FY2024 to be between $1.80 and $2.20, slightly lower than the consensus estimate of $1.99.
Though the second-quarter results showed encouraging progress for Nordstrom, analyst Dylan Carden from William Blair acknowledged the 8.3% sales decline, which was primarily driven by a 10.1% decrease in sales at the Nordstrom banner. Carden also highlighted the impact of the winding down of Canadian operations and a timing shift in the Anniversary Sale compared to the previous year. Telsey Advisory Group analysts lowered their price target for Nordstrom shares due to decelerating sales trends in the third quarter and the company’s ongoing merchandising challenges, particularly in the women’s apparel category. However, they remain encouraged by Nordstrom’s strategies and the early progress in its Rack business.