NEW YORK (AP) — Shares of Nordstrom are slipping in early trading after the upscale department store chain cut its annual profit outlook amid lackluster holiday sales that forced it to slash prices.

The disappointing report is the latest evidence that shoppers, including the well-heeled, have pulled back buying during the critical holiday season as they confront higher prices and borrowing costs.

Meanwhile, online furniture retailer Wayfair announced on Friday it was cutting 1,750 workers, representing 10% of its global workforce as of Dec. 31. That number includes 1,200 or 18% of its corporate employees. The Boston-based company said the reorganization is meant to remove management layers and become more agile. Along with another restructuring last August, the company expects the moves to lead to $750 million in annualized cost savings.

The news comes as the government reported on Wednesday that retail sales fell in December, marking the second consecutive monthly decline and the biggest monthly drop for 2022.

Seattle-based Nordstrom said on Thursday after the markets closed that net sales declined 3.5% for the nine-week holiday period ended Dec. 31, compared with the previous year. For the Nordstrom brand stores, net sales slipped 1.7%, while net sales at the off-price Nordstrom Rack dropped 7.6%.

“The holiday season was highly promotional, and sales were softer than pre-pandemic levels,” said Erik Nordstrom, chief executive of Nordstrom Inc., in a statement. “While we continue to see greater resilience in our higher income cohorts, it is clear that consumers are being more selective with their spending given the broader macro environment.”

Nordstrom said that it’s entering the year in a stronger position with lean inventory levels. It expects year-end inventory levels to be down by a double-digit percentage compared with last year, and roughly at 2019 levels.

Nordstrom believes that revenue growth for its fiscal year, including revenue from credit cards, will be at the low end of its previously issued outlook of 5% to 7%.

For the year, the company now expects earnings per diluted share, excluding the impact of share repurchase activity, if any, of $1.33 to $1.53 per share, compared with its prior outlook of $2.13 to $2.43.

Nordstrom is slated to report final fourth-quarter results after the close of the financial markets on March 2.

Shares of Nordstrom fell 1.7% to $17.16 in early trading. Wayfair shares rallied more than 10% to $42.90.

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