Nordstrom just gave an ugly outlook, shares crater (JWN)

Associated Press

Nordstrom reported fourth-quarter revenues and earnings below expectations on Thursday, with weak guidance. The shares tanked as much as 7% in after-hours trading.

As part of its fourth-quarter earnings announcement, the upscale fashion retailer said it expects full-year adjusted earnings per share (EPS) of between $3.10 and $3.35, but analysts had expected up to $3.55, according to Bloomberg.

This projection was made "in response to current sales trends," according to Nordstrom.

Across the industry, apparel retailers have struggled with declining traffic and have used deep discounts to try and boost sales.

The store's inventory surged 12% during the quarter, exceeding net sales growth of 5%.

The tally of the off-price Nordstrom Rack locations recently outpaced the number of regular stores. Unlike some competitors, Nordstrom customers can return items purchased at regular stores to the Rack, as BuzzFeed News recently reported. Rack is a fashion retailer owned by the department store.

And as Business Insider's Mallory Schlossberg noted, this could distort customers' perception of the store as a luxury brand, further discouraging them from buying full-price apparel.

The company projected that EPS in the first half of the year would decline by about 30% compared to the prior period. It attributed this, in part, to costs associated with the opening of its East Coast fulfillment center in August and other new stores, as well as the shifting of its anniversary sale event from Q2 2015 to Q2 and Q3 2016.

For the fourth quarter, revenues totaled $4.19 billion, below Wall Street's forecast for $4.22 billion, while EPS — excluding impairments — was $1.17, missing the projection for $1.21.

The shares had fallen 34% in the past 12 months ahead of the earnings announcement.

Here's the drop in after-hours trading:

Associated Press

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