Nordstrom Shares Plunge 18% on 2nd-Quarter Profit Warning

Nordstrom Inc. shares fell 18% after the retailer said that fiscal second-quarter profit will miss forecasts and that it will take a charge for the declining value of an investment in an online grocer.

The stock dropped $4.06 to close at $18.13 on the New York Stock Exchange after falling to a 52-week low of $16.56, and several analysts cut their ratings on the shares.

The company said profit in the quarter ending Monday will be 12 cents to 16 cents below the 55-cent average estimate of analysts polled by First Call/Thomson Financial.

Recent semiannual clearance sales and first-week totals at Nordstrom’s anniversary sale were below expectations, Nordstrom said. The chain was hurt last year by fashion missteps and inventory problems and has been trying to stock more popular styles this year.

“Nordstrom has been struggling to build merchandise and reconfigure the way it does business,” analyst Michael Exstein of Credit Suisse First Boston wrote in a report. “Clearly, this has become a much more difficult process than either the company or we realized.” Exstein lowered his rating on the stock to “buy” from “strong buy.”

Nordstrom also was hurt in the quarter by generally weak demand for apparel, which has resulted in lower-than-expected sales at many clothing retailers in recent months, analysts said.

Nordstrom Chairman and Chief Executive John Whitacre said he is “guardedly optimistic concerning our performance over the second half of this year.”

Nordstrom said it will take a charge of 4 cents to 5 cents a share to reflect the decline of its $33-million investment in Streamline.com Inc., which delivers groceries ordered over the Internet. The investment, made in 1998, may continue to decline in value, Nordstrom said.

Streamline.com rose 6 cents to close at $3.25 on Nasdaq. The Westwood, Mass.-based company sold 4.5 million shares at $10 in a June 1999 initial public offering.

Nordstrom is expected to release second-quarter results Aug. 16.