Nordstrom (JWN)

Nordstrom (JWN) announced after the close 1st quarter EPS of 54 cents a share on a 6.5% same store sales decline. Net income declined by 24%.

After a long string of impressive same store sales increases, Nordstrom’s same store sales turned negative in the Jan08 quarter and were just crushed this quarter (Nordstrom Same Store Sales Chart). Their forecast for the current quarter (Jul08) is for -5% to -7% same store sales (JWN Earnings Release).

The fourth quarter of Nordstrom's fiscal year depends upon holiday shopping, which contributes more revenue and profit to Nordstrom's annual figures than any other quarter. A weak holiday season can seriously hurt Nordstrom's end-of-year results, which seems more likely as Nordstrom's sales already lagged in the thid quarter.

A number of Nordstrom's customers are aspirational middle-class consumers who buy merchandise from Nordstrom to try to acquire the upper-class, luxury image invoked by the brands at Nordstrom. These middle-class consumers are more prone to losing disposable income in economic downturns and, in turn, cut back on their spending at high-priced stores such as Nordstrom.