Nordstrom shares are testing the recent lows after slipping 17% on the company’s earnings miss. Although revenue increased 1% to $3.25 billion, profits fell to $46 million or $0.26 per share from $128 million in the same quarter a year ago. Analysts were expecting to see $3.26 billion in profits or $0.46 per share.
This follows the downbeat earnings report from another retail giant Macy’s, signaling that the US consumer sector is lagging. A break below the recent lows at $45.25 for Nordstrom shares could set off further declines to the next support around $37.
The 100 SMA is above the 200 SMA for now so there’s a chance for a bounce, but the gap between the moving averages is narrowing so a downward crossover could be imminent. Meanwhile, stochastic is pointing down to indicate an increase in selling pressure while RSI is also heading south so Nordstrom shares might follow suit.
Management guidance was similarly downbeat, as it featured downgrades from earlier forecasts. The company projects net sales will rise 2.5% to 4.5%, down a percentage point from its prior outlook. Comparable sales are now expected in a range of -1% to +1%, down from its previous 0% to 2% range.
With that, both technicals and fundamentals suggest that the path of least resistance for Nordstrom shares is to the downside. Executives of similar companies have noted changes in consumer behavior, particularly those favoring online purchases, have impacted their performance throughout the quarter.
Nordstrom CFO Mike Koppel predicts that the uncertainty in sales trends to continue through the balance of the year. However, he also added that Nordstrom was seeing a transformation in its business model, as e-commerce took a greater share while mall traffic continued to decrease.
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