(Reuters) – On Tuesday, Nordstrom Inc cut its forecast for full-year sales and earnings after reporting weaker than expected results in Q1, which was damaged by the roll-out of a new loyalty program and slow sale of precious women's clothing.
The Seattle-based retailer, selling everything from clothing and footwear to home furnishings, to selling at full price and off-price businesses online and in stores, damaged by a failed roll-out of their "Nordy Club" loyalty program, reduced digital marketing and products that do not resonate with customers the company had hoped.
Co-President Erik Nordstrom said at a conference call after earnings, and the company stopped sending rewards "notes" to their loyalty customers via email in an attempt to get the program online and reach customers faster. That shift caused a reduction in foot traffic in all its stores, said executive, so many customers rely on receiving these rewards by mail.
"We make the changes we think are necessary to drive our top line as we continue our aggressive focus on spending," says Nordstrom.
Nevertheless, analysts remain concerned.
"While the challenges of full-line business in The least part can be expected is the deterioration in the off-pricing department, which is more uneasy, says Neil Saunders, CEO of GlobalData Retail.
The company also said that trends from the fourth quarter continued into the first quarter, and that it had to raise campaigns to remove excess inventory from its winter collection.
Like other brick retailers, Nordstrom has struggled to respond to consumers moving toward fast brands and websites like Amazon.com Inc instead of visiting malls.
Nordstrom has invested heavily in the Nordic drum Rack stores selling off-price merchandise in the US and Canada. Its Nordstrom Local shops are also a pride, where shoppers can consult personal stylists for fashion, their clothes have changed and more.
The company said it was on track to open its first store in New York in October, now expecting 2019 net sales between 2% fall to flat, compared to its previous projection of 1% to 2% increase.
The company expects 2019 profits between $ 3.25 per share and $ 3.65 per share compared to its previous forecast
Nordstrom earned $ 3.65 per share at $ 3.90 per share.
Total revenue for the first quarter, ended May 4, fell 3.3% to $ 3,444 billion, short of analysts' estimates of $ 3.58 billion, according to IBES Refinitive Data. 23 cents per share in the quarter, short of analysts' estimates by 20 cents.
Earlier on Tuesday, dealer JC Penney Co Inc dropped its same store sales more than expected in the first quarter and the net loss almost doubled after the dealer left his device and re-furniture companies, sending stocks down 10%.
Kohls Corp Tuesday slashed its full-year profit forecast for missing estimates for quarterly same store sales and profits, sending stocks down 11%.
Last week, Macy's rival Includes topped Wall Street estimates for quarterly same store sales and profits that benefit from increased online sales and higher demand for goods sold at their off-price stores.
(Reporting of Nivedita Balu in Bengaluru and Melissa Fares in New York; editing of Shailesh Kuber and Chris Reese)