Nordstrom, Inc. (NYSE:JWN) shares fell 11% to a six-week low around $21.80 on Wednesday as the US department store chain beat forecasts but observed softer sales trends toward the end of October and into November, keeping full-year guidance unchanged.
Results released overnight showed adjusted earnings per share of $0.33 and $3.46 billion in revenue, both ahead of expectations.
Net sales rose 4.6%, with comparable sales up 4.0%, thanks to a strong performance in women's apparel and active categories, both achieving double-digit growth.
"The continued sales growth across the company and strong gross margin in the third quarter indicate our team's focus and efforts are working," said CEO Erik Nordstrom, adding that the results "give us encouragement that we're on the right path".
Pete Nordstrom, president, said, "we feel well-positioned for a successful holiday season".
Guidance for full-year comparable sales growth was nudged slightly upwards to a range of 1% to 2%, but was kept unchanged for EPS of $1.75 to $2.05.
Analysts at UBS and Telsey noted that management had flagged a slowdown in sales towards the end of October and into November, as well as acknowledging challenges such as increased inventory levels due to slower sales in cold weather.
In September the founding Nordstrom family offered to take the chain private for $23 per share, or a total valuation of $3.8 billion.
The family, which owns approximately 33% of the shares, and Mexican retailer El Puerto de Liverpool, which owns about 10%, have proposed to acquire the rest of the shares they do not own.
Analysts at UBS said they believe Nordstrom "will continue to face challenges" versus off-price retailers and brands’ direct-to-consumer channels, "which we expect to drive further share losses".
"We think this will lead to downward EPS revisions and weaker sentiment over the next few years."
The UBS analysts said they see a "challenging setup" for Q4 sales and, along with the softer sales trends toward the end of October and into November, inventory growth outpaced sales growth rate for the second consecutive quarter, which it expected to put pressure on gross margin.
--Updated with share price information, analyst comment--