Nordstrom Inc. shares plummeted by 14% in pre-market trading in New York on Wednesday after the company released a lower-than-expected full-year sales forecast.
The department store company posted a full-year sales growth estimate of 5% to 7%; a percentage point cut. This comes just three months after the company raised its full-year estimates. In addition, Nordstrom cut its forecast for earnings per share on Tuesday as well.
The retailer has experienced a slowdown in in-store sales due to a demand slump. This has resulted in an inventory buildup. Nordstrom executives stated during a call with investors that the company is focusing on aggressively clearing out its inventory, especially after experiencing a significant slowdown in sales among lower-income shoppers in June. “The lower-income customer segments saw significantly more pullback versus higher income segments,” Chief Executive Officer Erik Nordstrom noted during the call.
Nordstrom is not alone in facing excessive inventory levels during this time. Fellow department store company Macy’s Inc. reduced its own full-year forecast for both profit and revenue, citing lower purchasing power among consumers. Walmart Inc. also finds itself looking for ways to shed its significantly high inventory levels.