Bleak retail earnings just ahead of Black Friday: Shares of Gap and Nordstrom got pummeled at the market open Wednesday after the retailers reported weak earnings due to supply chain issues.
Factory closures in Vietnam led to shipping delays at Gap. That jacked up costs because it had to spend nearly a half a billion dollars to air freight goods to meet strong demand for items such as its Yeezy hoodies and Old Navy apparel.
The clothing retailer cut its estimates for annual profit, and investors drove its shares down over 20% in early trading Wednesday.
Over at Nordstrom, the department store chain’s quarterly profit fell well short of analysts’ targets. Sales at its off-price stores, Nordstrom Rack, dropped 8% from 2019 levels as it suffered from severe shortages of women’s apparel and shoes.
The company was also hit by labor shortages in the U.S. that have forced retailers to boost wages and dish out bonuses, raising costs. It’s offering up to $650 in incentive pay to new store employees as it seeks to hire 28,000 workers for the holiday season.
No holly for Nordstrom shareholders, whose shares have vastly underperformed the broader markets with a measly 2% gain this year. They nose-dived 29% in early trading Wednesday.