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Nordstrom Profit Edges Up, But Misses Estimate

Nordstrom Profit Edges Up, But Misses Estimate

Upscale department stores operator Nordstrom, Inc. (JWN) said Thursday after the markets closed that its first quarter profit rose a modest 2.8% from last year, as costs to grow its e-commerce business dented a 13.7% sales growth.

The company's quarterly earnings per share also came in below analysts' expectations. At the same time, the company affirmed its fiscal year 2012 earnings outlook.

Gross profit, as a percentage of net sales, decreased 31 basis points compared with last year's first quarter, mostly due to enhancements made to the Fashion Rewards program and a reduction in shipping revenue as a result of launching free shipping and free returns for online purchases in the third quarter of 2011.

Retail selling, general and administrative expenses for the quarter surged 18% from a year ago, mainly due to various initiatives to attract customers and specifically to grow the company's e-commerce business.

Nordstrom currently operates 231 stores, including 117 full-line stores, 110 Nordstrom Racks, two Jeffrey boutiques, one treasure&bond store and one clearance store.

Nordstrom net sales, which include results from the full-line and direct businesses, increased 10.8% from a year earlier, with same-store sales up 9.3%. Top-performing merchandise categories included Handbags, Women's Shoes and Men's Shoes.

Full-line same-store sales increased 5.6%. The South and Midwest regions were the top-performing geographic areas. The direct channel continued to show strong sales growth with an increase of 44.2%.

Nordstrom Rack net sales for the quarter rose 19.6% from last year, with same-store sales up 6.8%.

Nordstrom shares are currently losing 5.29% in after hours trading after closing the day's regular trading session at $53.53, down 39 cents. The shares trade in a 52-week range of $37.28 to $57.75.

For the first quarter ended April 28, 2012, the Seattle, Washington-based company reported net income of $149 million or $0.70 per share, compared to $145 million or $0.65 per share for the year-ago quarter.

On average, 27 analysts polled by Thomson Reuters expected the company to earn $0.75 per share for the first quarter.

Total revenue, which includes credit card revenue, rose to $2.63 billion in the first quarter from $2.32 billion in the same quarter last year.

Net sales for the first quarter rose 13.7% to $2.53 billion from $2.23 billion a year earlier. Sixteen analysts had a consensus revenue estimate of $2.52 billion for the first quarter.

Same-store sales for the first quarter increased 8.5%.

Nordstrom affirmed its fiscal year 2012 earnings outlook of $3.30 to $3.45 per share. Analysts currently expect the company to earn $3.48 per share for the fiscal year 2012.

The company also said it continues to expect fiscal 2012 same-store sales to increase between 4% and 6%.

Due to Nordstrom's anniversary event starting one week later in July, an additional week of the event shifts into August, which is in the company's fiscal third quarter. As a result, the company said it expects a low-single-digit increase in same-store sales in the second quarter and a high-single-digit increase in same-store sales in the third quarter.

The company expects retail selling, general and administrative expenses for the fiscal year 2012 to increase $275 million to $340 million, which is an increase of $10 million from initial fiscal 2012 guidance and reflects additional ongoing e-commerce initiatives.

by RTT Staff Writer

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