Updated from 12:08 p.m. EDT
warned investors Wednesday that third-quarter earnings would be lower than expected, and it attributed the shortfall to restructuring charges, sluggish sales and losses from its investment in
The Seattle-based retailer expects several one-time charges during the quarter to drag down earnings estimates by up to 20 cents per share, while slower sales and operational expenses could lower results an additional 4 cents to 7 cents per share. The combination means Nordstrom could post a loss for the quarter. On average, the 22 analysts surveyed by
First Call/Thomson Financial
had expected earnings of 24 cents per share for the quarter.
Wednesday's profit warning sent shares of Nordstrom finishing Wednesday regular trading down $1.06, or 7%, at $14.63. The retailer's stock has lost more than half its value since May.
Nordstrom said it expects to pay charges of up to $43 million in its third fiscal quarter, which ends on Oct. 31. The one-time, pretax charges include $10 million for the write-off of some technology investments, up to $20 million related to losses from its investment in Streamline.com, an Internet retailer offering home delivery of groceries, and $13 million in senior management restructuring costs.
In late August, Nordstrom announced the
resignation of its chief executive and chief financial officer. Spokeswoman Brooke White said the retailer is still searching for a new chief financial officer. The CEO position has been eliminated with Blake Nordstrom, the 39-year-old former president of
and a fourth generation family member, assuming the top spot as president of the company.
On Wednesday, he tried to assure investors that most of the factors reducing its results in the third quarter were one-time charges, not related to day-to-day operations, and said the retailer was in the midst of reviewing its operations.
"Given recent changes in management, we are currently undertaking a thorough review of our business, listening to feedback from our customers and employees, and focusing on strong execution during the upcoming holiday season," Nordstrom said in a statement.
The high-end fashion retailer has been struggling to successfully reposition itself this year, after suffering from sliding sales for several months. Nordstrom initiated a series of
changes this spring, sprucing up its women's apparel department, shaking up its senior management, and speeding up implementation of technological improvements.
So far, the changes have not done much to improve the retailer's profits. Nordstrom earnings fell short of both
second-quarter estimates. Despite the store's display and merchandise changes, its second-quarter same-store sales fell 4.5%.
While Nordstrom said same-store sales for the month of September rose 7.9%, retail analysts point out that some of the additional sales were of marked-down inventory. The retailer acknowledged on Wednesday that its operating results had been dragged down in part by the markdowns.
Harry A. Ikenson, senior retail analyst at
, saw the increase in markdowns as one sign that the store has not achieved the right merchandise mix yet. "We think they are still terrific on service, but obviously they have a lot to address to get things back on the right track," Ikenson said.
Chase H&Q has a "market perform" rating on the stock with no long-term target price. The firm is currently revising its third-quarter earnings estimates, and has done no underwriting for the retailer in the past three years.
Nordstrom operates more than 100 stores in 23 states, including 76 full-line namesake stores, 34 Nordstrom Rack stores and a clearance center and three