Upscale department stores operator Nordstrom, Inc. (JWN: Quote) said Thursday after the markets closed that its second quarter profit fell 11% from last year, due to a shift in timing of the company's anniversary sale and the company's planned investments in e-commerce and technology.
However, the company's quarterly earnings per share came in above analysts' expectations. At the same time, the company raised its fiscal year 2012 earnings outlook.
The anniversary sale is historically the company's largest sale of the year and started one week later in July relative to last year.
Gross margin for the quarter decreased 98 basis points compared with last year's quarter, mainly reflecting a combination of the anniversary sale shift, enhancements made to the Fashion Rewards program and a reduction in shipping revenue from the launch of free shipping and free returns online that was introduced in the third quarter of 2011.
Retail selling, general and administrative expenses for the quarter surged 18% from a year ago, mainly due to the company's investments in various e-commerce and technology initiatives to improve the customer experience in stores and online.
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 6.1% from a year earlier, with same-store sales up 4.9%. Top-performing merchandise categories included handbags, women's shoes and cosmetics.
Full-line same-store sales increased 1.1%, with the South and Midwest regions being the top-performing geographic areas. The direct channel continued to show strong sales growth with an increase of 40%.
Nordstrom Rack net sales for the quarter rose 18.9% from last year, with same-store sales up 7.7%.
Nordstrom shares are currently gaining 1.13% in after hours trading after closing the day's regular trading session at $55.08, down 37 cents. The shares trade in a 52-week range of $37.28 to $57.75.
For the second quarter ended July 28, 2012, the Seattle, Washington-based company reported net income of $156 million or $0.75 per share, compared to $175 million or $0.80 per share for the year-ago quarter.
On average, 23 analysts polled by Thomson Reuters expected the company to earn $0.74 per share for the second quarter.
Total revenue, which includes credit card revenue, rose to $3.01 billion in the second quarter from $2.81 billion in the same quarter last year.
Net sales for the second quarter rose 7.4% to $2.92 billion from $2.72 billion a year earlier. Eighteen analysts had a consensus revenue estimate of $3.02 billion for the second quarter.
Same-store sales for the second quarter increased 4.5%.
During the second quarter, the company repurchased about 7.5 million of its shares for a total of $373 million, leaving $696 million for repurchase under its existing share repurchase authorization.
Nordstrom raised its fiscal year 2012 earnings outlook to a range of $3.40 to $3.50 per share from its prior guidance of $3.30 to $3.45 per share. Analysts currently expect the company to earn $3.45 per share for the fiscal year 2012.
The company also said it now expects fiscal 2012 same-store sales to increase between 6% and 7%, compared to its previous expectations of 4% to 6% growth.
The company continues to expect a high-single-digit increase in same-store sales in the third quarter.
The company said it is planning to further accelerate the expansion of the Nordstrom Rack business because of its strong performance and availability of quality locations. Over the last four years, Nordstrom has more than doubled the number of Nordstrom Rack locations to its current total of 110 stores. The company sticks to its initial plan for 15 store openings in 2012, but will increase to 24 openings in 2013. The company plans to have more than 230 Rack stores by the end of 2016.
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by RTT Staff Writer
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