Nordstrom (JWN) - Get Nordstrom, Inc. (JWN) Report stock plunged on Wednesday, falling more than 25% in early trading, after the retailer posted earnings that fell short of Wall Street forecasts amid inventory woes related to supply chain issues as well as staffing costs.
Nordstrom reported after the closing bell Tuesday that it earned $64 million, or 39 cents a share, in the third quarter, up from $53 million, or 34 cents a share in the same period a year ago but short of analysts’ forecasts of per-share earnings of 56 cents.
Revenue came in at $3.64 billion, up from $3.09 billion a year ago and above analysts’ forecasts of $3.55 billion, though still down slightly from the $3.67 billion Nordstrom reported in the third quarter of 2019.
At last check, shares of Nordstrom were down 25.37% at $23.83. The price decline was the biggest the company has seen since going public in 1971. As of Tuesday’s close the stock was up 5.28% year to date.
“We’re taking action to improve performance at Nordstrom Rack, including optimizing inventory levels, better balancing price points and increasing brand awareness,” CEO Erik Nordstrom said in a statement.
Nordstrom said its inventory levels grew 13% vs. the same period in 2019 as it pulled forward some orders of goods to try to mitigate ongoing supply chain bottlenecks.
“Work is also underway to improve merchandise margin across the company and ensure we have the visibility and flexibility we need to serve our customers seamlessly, despite global supply chain challenges,” Erik Nordstrom said.
Administrative costs, meantime, also rose, "...primarily as a result of labor cost pressure, partially offset by leverage on higher sales," the company said.
So-called selling, general and administrative, or SG&A expenses, as a percentage of net sales, increased 260 basis points compared with the same period in fiscal 2019 "...as a result of fulfillment and labor cost pressures."
The retail chain still expects annual revenue including credit card sales to grow more than 35% from last year.
Separately, Gap (GPS) - Get Gap, Inc. (GPS) Report reported Tuesday fiscal third-quarter results that missed forecasts as Covid-related factory closures led to significant product delays in the quarter. It also slashed its full-year outlook.
Shares of Gap were down 22.18% at $18.28 at last check.