Nordstrom Inc forecast full-year revenue below Wall Street estimates on Thursday, signaling high inflation levels were dampening consumer spending on discretionary items while the retailer decided to discontinue its Canadian business operations to drive profitability.

Stubbornly high inflation has resulted in higher rental, food and consumer prices, pushing consumers especially at the lower income rung to shop at discount stores and off-price retailers that offer products at affordable prices than at department stores or specialty retailers.

Nordstrom has seen steady demand from higher income consumers who helped boost sales for the retailer’s full-price stores. However, analysts expect consumers are being more selective in their purchasing due to an uncertain macro environment.

In January, Nordstrom saw lower-income consumers, Rack’s core base, have cut back on spending on non-essentials as recession fears swirl, while efforts to capture a shift to trading down have been hampered by inventory problems sparked by the pandemic-induced supply disruptions.

The company projects fiscal 2023 revenue to fall 4% to 6%, while analysts on average expect a 0.07% rise.

The department store chain forecast fiscal 2023 adjusted profit per share of $1.80 to $2.20, while analysts on average expect $1.94 per share, according to Refinitiv IBES data.

Shares of the company fell marginally in after market trade.

By Ananya Mariam Rajesh

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