JWN Nordstrom Inc

Dillard's Inc. became the latest retailer to report a steep drop in first-quarter earnings, pulled lower by weaker sales as consumers spend less at traditional stores.

Shares in the company declined 3.7% in after hours trading. Through Thursday's close, the stock had lost more than half its value.

The Little Rock, Ark.-based department store said sales at stores open at least a year slid 5% in the first three months of the year, marking the third straight quarterly decline and more than double the decrease analysts projected.

Chief Executive William Dillard II said disappointing sales pressured the company's gross margin and net income, eclipsing efforts to control expenses. "Sales leverage was difficult to achieve," he said, noting particular weakness in home, furniture and women's categories.

The report is the latest in a batch of weak reports across the retail space. On Wednesday, a worse-than-expected sales slide at Macy's Inc.--the nation's biggest department-store chain—and subsequent guidance cut sparked a selloff across apparel makers, mall owners, luxury brands and rival chains. Higher-end rival Nordstrom Inc. on Thursday also slashed it outlook for the year after it logged disappointing first-quarter results.

Retailers ranging from department stores like Dillard's to specialty shops to Wal-Mart have been struggling with dwindling store traffic, competition from discount retailers and cautious consumer spending. Americans' shift to online shopping and fast-fashion chains like H&M Hennes & Mauritz AB has pressured more traditional retailers, forcing many to shutter stores, lay off workers and, in cases like Aerospostale Inc., to go bankrupt.

For the quarter Dillard's reported a profit of $77.4 million, or $2.17 a share, down from $109.6 million, or $2.66 a share, a year earlier. Revenue fell 4.5% to $1.50 billion.

Analysts projected $2.52 in earnings per share on $1.56 billion in revenue, according to Thomson Reuters.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

May 12, 2016 17:35 ET (21:35 GMT)

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