Nordstrom (JWN) -) shares slumped, paring outsized gains that followed the release of its second-quarter earnings, after the upscale retailer forecast higher default rates on its credit cards in a cautious consumer environment.
Nordstrom, which targets a higher-income consumer base than many of its department store rivals, reported adjusted profit for the three months ended in July came in at 84 cents a share, up 3.7% from a year earlier and firmly ahead of the Street consensus forecast of 45 cents.
Overall revenue was down 8.3% to $3.66 billion, a tally that also beat the analyst consensus estimate of $3.65 billion.
Nordstrom: 'Losses from theft at historical highs'
Nordstrom also said that store-theft levels hit an all-time high over the quarter, echoing concerns expressed by other retailers over the first half of the year.
The company noted that payment delinquencies on store-issued credit cards had accelerated above prepandemic levels and would worsen over the second half
"Losses from theft are at historical highs. And I'd say we find it unacceptable and needs to be addressed. That being said, while it's unacceptable, it is within our plans," Chief Executive Erik Nordstrom told investors on a conference call late Thursday. "We have not seen continuing rising of shrinkage that has exceeded what we planned."
"The drag on earnings, just from a financial performance, that needs to come down," he added. "And we've done a lot of things, and we're looking at everything we can do to make our stores safe and secure, first of all, but also to address the loss."
Nordstrom shares at last check were marked 11% lower around $15.
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