Nordstrom raises annual profit forecast
NEW YORK (AP) — Upscale retailer Nordstrom Inc. raised its annual profit and sales outlook Thursday and said that it was accelerating the growth pace of its Rack outlet stores.
The news came as the Seattle-based retailer reported an 11 percent decline in second-quarter net income, as results were affected by the timing of the company's biggest annual sale that pushed some of the promotions into August.
Sales have rebounded since late 2009 for Nordstrom and many other luxury retailers as well-heeled shoppers have gotten more comfortable with splurging again. But Nordstrom and others are also grappling with new demands from shoppers, armed with smartphones and tablets. That's pushing the high-end merchant, long known for its service, come up with up with new ways to cater to customers.
"There's a lot of momentum in our company," company President Blake Nordstrom told analysts during a call after the earnings report late Thursday. "The overarching theme in our company continues to be about improving the customer experience across all channels."
A year ago, Nordstrom started offering free shipping on all online purchases with no minimum dollar amount. Previously, customers had to spend at least $200 to qualify. Return shipping is free, too. The company is also giving sales associates devices that let them check out shoppers anywhere in the store.
Last month, the company announced that it teamed up with Arcadia Group to launch shops under the British company's Topshop and Topman brands in 14 of its 117 full-scale department store locations. With this deal, Nordstrom will become the largest U.S. retailer to sell a broad assortment of the U.K. brands' trendy fashions in its stores and online. Topshop offers women's clothing, while Topman is the menswear counterpart.
Nordstrom also said last month that it plans to open its first full-scale store in New York. The new store is slated to open in 2018.
Nordstrom said Thursday it earned $156 million, or 75 cents per share, for the quarter ended July 28. That compares with $175 million, or 80 cents per share, in the year-ago period.
Sales excluding credit card revenue rose 7.4 percent to $2.92 billion. Revenue at stores open at least a year rose 4.5 percent. The measure is key metric of a retailer's health because it excludes the impact of stores that have opened or closed in the past year.
Online sales soared 40 percent.
Analysts surveyed by FactSet had expected earnings per share of 74 cents on revenue of $2.96 billion, on average.
The company said that its biggest sale of the year, which lasts 17 days, started a week later this year than last year, and that shift hurt profits. That pushed some of the promotions into August.
Revenue at stores open at least a year rose 1.1 percent at its full-scale stores, but Rack stores enjoyed a 7.7 percent gain.
Based on the strong performance at its outlet stores, Nordstrom said that it will accelerate the pace of Rack's expansion. Over the past four years, Nordstrom has more than doubled the number of Nordstrom Rack locations to its current total of 110 stores. Its initial plan for 15 stores opening in 2012 remains intact and will increase to 24 openings in 2013. The company plans to have more than 230 Rack stores by the end of 2016.
Nordstrom said that it now expects revenue at stores open at least a year to rise anywhere from 6 percent to 7 percent for the full year. That's up from its earlier growth forecast of 4 to 6 percent.
Nordstrom also said it now expects earnings per share for the full year between $3.40 and $3.50. That's up from the original forecast of $3.30 to $3.45 per share. Analysts had expected $3.45 per share.
In after-hours trading, Nordstrom shares added 2.6 percent, or $1.42, to $56.50. The stock ended regular trading down 37 cents at $55.08.
