Nordstrom on Tuesday reported earnings that fell short of analysts’ expectations as labor costs ate into profits and sales and its Nordstrom Rack business struggled to return to pre-pandemic levels.

The news sent its stock tumbling more than 23% in extended trading.

The department store chain has tried to take advantage of shoppers refreshing their wardrobes as people return to offices and social events. Sales outpaced Wall Street estimates in the third quarter, but the company only reiterated its revenue forecast for the year.

The disappointing performance was in stark contrast to rivals Macy’s and Kohl’s, which last week boosted estimates for the remainder of the year. Both companies have been more successful in passing along higher costs to shoppers and carefully managing inventory.

Chief Executive Officer Erik Nordstrom said the company needs to move more quickly to capitalize on its strengths and increase its market share.

“We are focused on accelerating our transformation and improving results,” Erik Nordstrom said in a press release.

Here’s how Nordstrom did in the three-month period ended Oct. 30 compared with what analysts were anticipating, using Refinitiv data:

• Earnings per share: 39 cents vs. 56 cents expected
• Revenue: $3.64 billion vs. $3.55 billion expected

Net income rose to $64 million, or 39 cents per share, from $53 million, or 34 cents a share, a year earlier. Analysts had been looking for per-share earnings of 56 cents, according to a Refinitiv survey.

Revenue, including credit card sales, climbed to $3.64 billion from $3.09 billion a year earlier, topping expectations for $3.55 billion. But that’s still down slightly from the $3.67 billion Nordstrom reported in the third quarter of 2019.

At Nordstrom’s namesake department store brand, revenue rose 11% from a year ago and climbed 3% on a two-year basis. More customers came to its stores, and shoppers spent more per purchase. Nordstrom cited home goods, active apparel, designer brands and beauty as areas of strength.

At Nordstrom Rack, an off-price division that competes with TJ Maxx and Macy’s Backstage, sales were up 35% from 2020 but fell 8% from 2019.

The company said it’s taking steps to improve Rack’s performance, including investing in raising brand awareness, better managing inventory levels and balancing prices to put them in closer alignment with shoppers’ expectations.

Digital sales fell 12% year over year and rose 20% on a two-year basis, representing 40% of the business. Nordstrom noted that last year its annual Anniversary Sale, which takes place primarily online but also in stores, was moved entirely into the third quarter, while this year it only fell during one week of the quarter.

Nordstrom said its inventory levels grew 13% compared with the same period in 2019, due to the department store operator pulling forward some orders of goods to try to mitigate ongoing supply chain bottlenecks.

It still expects annual revenue, including credit card sales, to grow more than 35% from last year. Analysts had been looking for a 36% increase, according to Refinitiv.

Nordstrom’s stock is up less than 1% year to date, as of Tuesday’s market close. Its market cap is about $5.1 billion.

Find Nordstrom’s full earnings press release here.