© Reuters. FILE PHOTO: The Nordstrom Inc company logo will appear on a display on the New York Stock Exchange (NYSE) in New York, United States on October 22, 2019. REUTERS / Brendan McDermid
(Reuters) – Nordstrom Inc. (NYSE 🙂 said labor costs cut its quarterly earnings and warned of product shortages in its off-price stores ahead of the holiday season, which dropped its stocks 23% in expanded trading on Tuesday.
The Seattle-based company, like other retailers, is under tremendous pressure to keep its shelves full for the holiday season as shipping jams, closed factories in Asia, and raw material shortages disrupt global supply chains and lead to product bottlenecks.
Nordstrom rack-off-price stores have particularly suffered from a severe shortage of women's clothing and shoes.
The company said Nordstrom Rack store net sales were 8% lower than 2019 levels in the third quarter, at a time when rivals Macy's Inc (NYSE 🙂 and Kohl's Corp (NYSE 🙂 will again be above pre-pandemic sales.
Chief Executive Officer Erik Nordstrom said the company's underperformance was due to both internal decisions and the wider supply chain issues.
“We didn't react as quickly and aggressively as we needed, especially with Rack …
The company also reported a surge in costs for the quarter as it spent more on staffing its stores amid the US labor shortage that forced retailers to raise wages and distribute large bonuses.
Nordstrom announced in October that it would be hiring more than 28,000 workers for the holiday season and offering new store employees up to $ 650 in incentive awards.
Nordstrom maintained its annual sales growth forecast of more than 35%, while competitor Macy & # 39; s raised its sales expectations up to 40% last week.
The company posted quarterly earnings of $ 64 million, or 39 cents per share, and fell short of 56 cents estimates according to Refinitiv IBES data.
The shares were trading at $ 24.60 and should have their worst day ever.
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