Nordstrom Profits Rise 22%, But Fall Short of Forecasts
Nordstrom said late Monday its fourth-quarter profit rose 22% in the period that includes the crucial holiday season. The results just missed Wall Street expectations, sending the clothing retailer's shares lower.
For the quarter ended Feb. 3, Nordstrom reported net income of $232.3 million, or 89 cents a share, up from $190.4 million, or 69 cents a share, for the same period last year.
Quarterly sales increased 15% to $2.6 billion, from $2.3 billion last year. Same-store sales, which excludes stores that weren't open a year ago, grew 8.3%.
Analysts surveyed by Thomson Financial were predicting earnings of 90 cents a share on sales of $2.6 billion. The fourth quarter was one week longer than the same period a year earlier.
Nordstrom said its same-store sales exceeded the company's plan, driven by sales across all major categories and a good response from holiday shoppers.
The company also said its merchandise margins improved from a year earlier, with fewer items marked down and better sales in women's clothing. Executives credited that to a new strategy launched last year to improve women's apparel, from casual and career wear to coats and dresses.
"It's probably a little less than half the way through," Pete Nordstrom, the company's president of merchandising, told analysts in a conference call. "But keep in mind, these are strategies that we're going to continue to update over time. It doesn't stop with what we've done here."
For the full year, Nordstrom said profits grew 23% to $678 million, or $2.55 a share, compared with $551 million, or $1.98 per share, a year ago.
Nordstrom said a stock-based compensation expense of $8.4 million lowered fourth-quarter earnings by 2 cents a share. The expense was included in analysts' consensus estimate.
For the current fiscal year, Nordstrom said it expected same-store sales growth of 3% to 4%, and full-year earnings per share of $2.78 to $2.84. Analysts had been forecasting earnings of $2.91 a share, according to Thomson Financial.
The company expects first-quarter earnings of 51 to 54 cents a share. Analysts are projecting earnings of 57 cents a share.
The retailer plans to open Nordstrom stores this fall in three cities: Denver; Natick, Mass.; and Novi, Mich. The company also plans to open one Nordstrom Rack discount store in Tukwila, Wash.
Nordstrom also plans to install new inventory systems and expand its call and distribution centers in Cedar Rapids, Iowa, which serves its catalog and online business, said Blake Nordstrom, the company's president.
"Our goal moving forward is to provide a more seamless shopping experience throughout all of our channels," he said in a conference call.