Kohl's, Nordstrom Cut Year Views as Holidays Loom

Kohl's and Nordstrom, two large U.S. retailers, reported sharply lower quarterly profits Thursday and warned of worse-than-expected results for the rest of the year, just weeks before the critical holiday shopping season gets under way.

Shares of both companies slid in extended trade after the announcements. Mid-priced apparel and home goods retailer Kohl's said quarterly profit fell 17 percent and cut its 2008 forecast.

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Upscale department store Nordstrom said profit fell a whopping 57 percent as even wealthy customers searched for bargains.

"We are in unprecedented times and customers are lacking confidence today,'' Nordstrom President Blake Nordstrom said on a conference call with investors.

U.S. consumers grappling with falling home values, job losses and a bleak economic picture have pulled back on purchases of all but essential items. Retailers, meanwhile, are bracing for what is expected to be the worst holiday season in nearly 20 years by tightening inventories, closing stores, dropping unprofitable merchandise and offering deep discounts.

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"We expect the holiday season to be the most difficult environment for the consumer in years,'' Kohl's Chief Executive Kevin Mansell said on his company's conference call.

Kohl's profit fell to $160.2 million, or 52 cents per share, from $194.0 million, or 61 cents, a year earlier.

That was above the average analyst forecast of 51 cents per share, according to Reuters Estimates, helped by sales of its private brands and lower inventory levels.

Kohl's forecast full-year earnings of $2.69 to $2.84 per share, and 90 cents to $1.05 per share for its fourth quarter, lower than a previous full-year view of $3.02 to $3.18 per share and $1.26 to $1.34 for the fourth quarter.

Kohl's said it expects fourth-quarter sales at stores open at least a year, or same-store sales, to be down 8 to 12 percent.

Analysts polled by Reuters Estimates were looking for a full-year profit of $2.99 per share and $1.23 per share for the fourth quarter.

Kohl's said quarterly net sales fell 0.6 percent to $3.8 billion. Analysts had expected sales of $3.88 billion. Quarterly sales at stores open at least a year fell 6.7 percent.

Shares of Kohl's fell more than 4 percent in extended trading from their close of $30.57 earlier on Thursday.

Nordstrom Sees Slowdown

On the upscale side of the ledger, customers are "shopping less and are making more deliberate purchases,'' Blake Nordstrom said on the conference call.

Nordstrom reported a net profit of $71 million, or 33 cents a share, for its fiscal third quarter ended Nov. 1, compared with $166 million, or 68 cents a share, a year earlier. Analysts had expected earnings of 30 cents per share.

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Same-store sales sank 15.6 percent in the quarter. Last week, Nordstrom said October same-store sales sank to 15.7 percent.

For the fourth quarter, Seattle-based Nordstrom expects earnings of 35 to 45 cents a share, assuming a drop in same-store sales of 13 to 16 percent. Analysts had forecast earnings of 70 cents per share for the fourth quarter.

Nordstrom also lowered its forecast for the current fiscal year to $1.87 to $1.97 per share from a previous view of $2.55 to $2.65. Analysts had expected $2.19 for the full year.

Nordstrom shares closed at $12.96 Thursday on the New York Stock Exchange and fell over 3 percent after the company released results.

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