Associated Press
SEATTLE — Clothing store chain Nordstrom Inc. may end up posting a third-quarter loss because of losses on technology investments and severance for fired top executives, the company warned Wednesday.
Nordstrom said its earnings could be as high as 2 cents per share, but could wind up as a loss of 2 cents per share. That’s far from the estimates of analysts surveyed by First Call/Thomson Financial, who had predicted a profit of 25 cents per share.
Wednesday’s news sent Nordstrom shares plummeting. The stock closed down $1.06, or 6.8 percent, at $14.63 on the New York Stock Exchange, matching a 12-month low.
Nordstrom’s 1998 investment in Streamline.com, an online grocery service, continued to plague the company, which said it would write off between $18 million and $20 million due to the loss in value. The company already took a $10.5 million charge in the second quarter due to Streamline.com.
Another $13 million went to severance payments for executives recently laid off as the Nordstrom family retook control of the company.
The company’s final $10 million charge was a write-off for internal technology investments, such as store computers and Y2K compliance issues.
While the charges will hurt third-quarter results by 19 to 20 cents per share, the company added that lower-than-expected sales, higher markdowns and other expenses would drive earnings down another 4 to 7 cents per share, illustrating that Nordstrom is still reeling from its past mistakes and an increasingly difficult retail market.
Former Chairman and chief executive officer Jon Whitacre had been criticized for his marketing and merchandising plans, which attempted to create a fresh look in both the company’s fashion lines and its advertising. The "Reinvent Yourself" campaign flopped with the company’s loyal customers, accustomed to a more genteel and upscale shopping experience.
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