Nordstrom has suffered a steep drop in fourth-quarter profits after heavy discounting took its toll on the US retailer’s bottom line.

The department store giant was forced to slash prices during the holiday season after unseasonably warm weather and a decline in shopping centre footfall left it saddled with excess stock.

The business has also been battling with a shift in US consumer spending towards leisure, services and experiences rather than retail.

Nordstrom said net earnings during the quarter ending January 30 slumped 29.4% to $180m, compared with $255m the previous year.

The retailer reported EBIT of $324m, down 30.3% from $465 on the year despite a 1% uplift in like-for-like sales.

Nordstrom’s gross profit margin dropped 184 bps to 34.8% following the increased markdowns, which it blamed on “lower than planned sales” and “an elevated promotional environment” during the quarter surrounding Black Friday, Thanksgiving and Christmas.

Its disappointing sales came in the wake of weak trading figures from department store rivals Macy’s and Kohl’s.

Full-year performance

Despite missing forecasts during the quarter, Nordstrom said its full-year earnings were “in-line with expectations”.

Net profits for the year ending January 30 decreased 16.7% to $600m, while EBIT slipped 15.4% to $1.1bn.

Nordstrom said it would invest less in stores across the next five years and planned to slash $300m from its capital expenditure of $4.3bn.

However, it still plans to open three new full-line stores, including two in Toronto, and 20 new Nordstrom Rack stores during 2016.

Nordstrom’s shares slumped as much as 8.5% to $48.25 (£33.83) on the day the results were revealed. Its share price has now dropped 17% since it unveiled its third-quarter results last November.