Nordstrom (JWN) plummeted 15% after reporting disappointing first quarter earnings on Thursday. Its results, following disappointing report cards at Macy’s (M) and Kohl’s (KSS), marked the third major mall anchor in a row this week to report steep declines in profitability and sales. Declining sales at J.C. Penney (JCP) on Friday morning rounded out a dismal week for the sector, which his being forced to confront a dramatic consumer shift toward e-commerce.

At the high-end department store, comparable store sales fell 7.7%, reflecting declining traffic and increased promotional activity like discounts.

According to Morgan Stanley’s Kimberly Greenberger, even the most bearish analysts covering the company were not prepared for such a decline, including a 60% drop in earnings per share.

During Thursday’s earnings call, co-President Blake Nordstrom conceded “we recognize that the pace of change is increasing.”

The management team pointed to the key issue they are facing in the near-term.

“Where we’re seeing a big miss is in our clearance and promotional business,” said co-President Eric Nordstrom. “There’s a lot of excess product in the marketplace. It’s certainly easy to shop online. There’s some heavy discounting going on. And we’re seeing that in our business.”

While the management team said they were encouraged by traction in categories that are new and full-price, the overhang of discounting and competition remains strong.

“We have been more purposeful for, I’d say, the last couple of years of matching price on products online, really for big online retailers, wherever they may be,” he added.

And the promotional environment is being driven by a growing number of names. “It’s the traditional competitors, and it’s the fact that all these brands are retailers as well. Everyone finds themselves in a tough environment, and they’re doing what they can to stimulate sales,” said Pete Nordstrom, Executive Vice President.

Off-price goods may not save the company

While management emphasized the importance to off-price goods to customers, uncertainty remains.

RBC analyst Brian Tunick warned of cannibalization of sales by off-price goods. Off-price (Rack and ecommerce) accounts for about 30% of total sales, and they expect it to reach almost 35% of sales by 2020. “We are somewhat worried about disproportionate store and sales growth at Rack as it catalyzes the shift towards value channels.”

It’s worth noting, however, that off-price growth is slowing.

 The company has been the first-mover in investing in online and new fashion trends--from Haute Look to Trunk Club. The company has also developed partnerships with the likes of Bonobos, Warby Parker and Brandy Melville, and Baublebar. And customer service has been a priority. Given all this focus, their fall from grace reflects real concern about the retail industry.

The ultimate question for investors is if CFO Mike Koppel’s characterization of the current environment as a “down-cycle” is fair or if results reflect real secular, long-term headwinds that Nordstrom won’t be able to overcome.