Nordstrom cuts profit forecast on higher costs By Reuters

© Reuters. FILE PHOTO: A Nordstrom store is pictured in New York, U.S., March 1, 2021. REUTERS/Brendan McDermid/File Photo

(Reuters) -Nordstrom Inc trimmed its annual profit forecast on Tuesday, as the retailer wrestles with supply chain pressures, higher operating costs and aggressive discounting to clear out-of-fashion inventory.

Shares of the Seattle-based firm fell about 5% in extended trading.

Net sales in its eponymous stores declined 3.4%, while its off-price division, Nordstrom (NYSE:) Rack, posted a 2% fall.

The company expects fiscal earnings per share, excluding the impact of repurchase activity, to be between $2.13 and $2.43, compared to prior forecast of $2.45 to $2.75.

Profit margins of global fashion retailers have been hit by rising raw material, labor costs and supply chain disruptions aggravated by the war in Ukraine.

Nordstrom has also been offering steep discounts and promotions to clear excessive and outdated inventory, especially in the private label category.

The company reported a net loss of $20 million, or 13 cents per share, for the third quarter ended Oct. 29, compared to a profit of $64 million, or 39 cents per share, a year earlier.

Total revenue fell 2.4% to $3.55 billion, but beat analysts’ expectations of $3.47 billion, according to Refinitiv data.

Adjusted earnings was 20 cents per share, also topping estimates of 13 cents.

The company reaffirmed its annual revenue and adjusted profit forecasts.

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By Reuters