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Nordstrom Profit Edges Up, But Misses Estimate

Nordstrom Profit Edges Up, But Misses Estimate
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5/10/2012 5:52 PM ET

Upscale department stores operator Nordstrom, Inc. (JWN: Quote) 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.

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by RTT Staff Writer

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