But its results still topped Wall Street expectations. The Seattle-based upscale department store reaffirmed its financial annual outlook that calls for a sales decline for the year.
After initially rising, its stock was down about 2% in after-markets trading Thursday.
Nordstrom’s sales were affected by the timing of the company’s anniversary sale, with one week falling into the third quarter this year compared to one day in 2022. Moreover, last year’s results included a full quarter of sales from its Canadian operations, which the company wound down in June of this year.
Nordstrom reported net income of $137 million, or 84 cents per share, for the quarter ended July 29. That compares with $126 million, or 77 cents per share, in the year-ago period.
Total sales fell 7.9% to $3.77 billion from $4.09 billion in the quarter.
Analysts were expecting 45 cents per share on $3.67 billion, according to FactSet.
Nordstrom said that it saw improvement in many areas. For example, children's and men's clothing performed better than average at both the Nordstrom stores and Nordstrom Rack. Women’s clothing improved sequentially from the first quarter. The chain said that inventories are down 18% from a year ago.
Nordstrom said it expects a revenue decline between 4% to 6% for the year compared with a year ago. It also expects earnings per share of between $1.80 per share to $2.20 per share for the year, excluding charges related to the wind-down of its Canadian operations. Analysts expect $1.98 per share, according to FactSet.
Its results follow Kohl’s, which reported on Wednesday that profits dropped nearly 60% due to weak second-quarter sales. On Tuesday, Macy’s said it was forced to discount its spring goods to make room for fall and holiday merchandise in the face of customers’ muted spending.
The reports come as shoppers are still dealing with high inflation and higher interest rates that are making it more expensive to take out a loan on a car or a house or carry debt on credit cards.
Nordstrom executives told analysts on a conference call Thursday that the retailer has seen credit card delinquencies rising gradually, and they are now above pre-pandemic levels. That could result in higher credit losses in the second half of the current fiscal year and into next year, the company said.
Macy's also cited a faster-than-anticipated rise in credit card delinquencies, signaling more financial pressure for shoppers in the second half of the year. And many stores are flagging uncertainty over the end of the student loan moratorium, which had provided one-time college students a little more financial breathing room.
Meanwhile, Gap Inc., which operates stores under its namesake, as well as Banana Republic, Old Navy and Athleta, reported on Thursday a profit from a year-ago loss despite an 8% sales decline. The results fell short of Wall Street estimates.
The San Francisco-based company — which has been mired in a sales malaise for years and just appointed former Mattel executive Richard Dickson as its new CEO — saw declines across all of its brands.
Gap is estimating that third-quarter net sales could decrease in the low-double-digit range. For the year, the company said it anticipates net sales could decline in the mid-single-digit range compared to the previous year.
Gap shares were up about 1.5% in after-markets trading.