Finance news

Upscale department store chain Nordstrom Inc. reported a 21% drop in second-quarter profit on Thursday and cut its full-year forecast, as its affluent consumers pull back on fashion spending in a tough economy.

The Seattle-based chain said Thursday that it earned $143 million, or 65 cents per share, in the 3-month period ended Aug. 2, compared to $180 million, or 71 cents per share, a year earlier.

Total sales fell 4.3% to $2.29 billion.

Analysts surveyed by Thomson Reuters had expected profits of 64 cents per share on revenue of $2.31 billion.

Nordstrom (JWN, Fortune 500) reported a 6% drop in same-store sales for the overall company. Same-store sales, or sales at stores open at least a year, are considered a key indicator of a retailer’s health.

The company said that results at its department stores continue to be challenging, while its discount concept called Nordstrom Rack has maintained strong sales growth. Nordstrom suffered a 9% decline in same-store sales, while Nordstrom Rack enjoyed a 6.3% gain payday advance. Sales for Nordstrom Direct, its e-commerce division, increased 14.6%.

The company said it now expects earnings per share for its fiscal year ending Jan. 31 to be in the range of $2.55 to $2.65 per share. That’s down from an earlier forecast of $2.65 to $2.80 per share. Analysts surveyed by Thomson Reuters expect $2.68 per share for the year.

Nordstrom announced its earnings results after the regular markets closed.

On Wednesday, department store chain Macy’s Inc. (M, Fortune 500) also posted a lower second-quarter profit and warned that its full-year earnings will be below expectations.

That, along with a pared-down outlook from key supplier Liz Claiborne (LIZ, Fortune 500) and a somber government report on retail sales in July, suggests a persistent slowdown for retailers as they face the critical back-to-school and holiday shopping seasons. 

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