Nordstrom Inc. beat Wall Street’s profit estimates on lower markdowns and better inventory management, but revenue fell short — highlighting the challenges the upscale department-store operator faces heading into Black Friday and the holiday season.

Sales at the company’s namesake banner stores fell 9.4% in the three months ended Oct. 28 and missed market expectations. At the off-price Nordstrom Rack stores, revenue dipped a more modest 1.8%, in line with estimates from analysts surveyed by Bloomberg.