By  on February 24, 2006

NEW YORK — Boosted by strong sales volume, Nordstrom Inc. posted a 36 percent rise in fourth-quarter earnings as demand for luxury goods continued at a breakneck pace.

In the three months ended Jan. 28, the company earned $190.4 million, or 69 cents a diluted share, compared with $140 million, or 50 cents, last year. Net sales totaled $2.3 billion, up 9.3 percent from last year's $2.1 billion, while same-store sales rose 5.8 percent, significantly ahead of the company's guidance for 1 to 3 percent.

"Our operating model continues to perform with efficiency as gains in comparable-store sales provide consistent flow through to the bottom line," the company said on a post-earnings conference call with analysts and investors.

In the full year, Nordstrom earned $551.3 million, or $1.98 a share, up from $393.5 million, or $1.38, last year. Revenues rose 8.3 percent to $7.7 billion.

Earnings-per-share results in both the quarter and year beat analysts' estimates by a penny.

The company said in the quarter, its best-performing merchandise categories were cosmetics, accessories, women's and kids' shoes, and men's apparel. A successful men's half-year clearance event and improvement in regular-price sales drove volume, Nordstrom said in a written statement.

As a result, gross profits as a percent of sales expanded 81 basis points, the company said.

Nordstrom opened one store in Dallas during the quarter and it plans to open a store in Palm Beach, Fla., on March 10. The retailer will open five new stores in 2007.

Despite the quarter's solid results, Nordstrom outlined on the conference call three areas that it said "hold unique opportunities": women's apparel, multichannel integration and its designer business. The company's first goal is "reenergizing women's apparel," according to Blake Nordstrom, president of the company. In women's apparel, which makes up about one-third of total sales, Nordstrom has been working to develop more targeted merchandising strategies.

"We are now in the process of determining how our lifestyle departments should evolve to better serve our women's customers," Nordstrom said. Specific opportunities include expanding into contemporary segments and improving wear-to-work offerings.

As for multichannel integration, Nordstrom plans to migrate this year its direct inventory system into its full-line store platform, which should help align the online and catalogue shopping experience with that in its full-line stores and create a more seamless shopping experience, Nordstrom said.Its last initiative is to "have a complete designer offering in at least one store for every major market we serve" across the footwear, apparel and accessories categories.

"Today, the foundation is in place for us to bring more innovation and creativity into offering a differentiated shopping experience for our customers. By focusing on our people, merchandise, new stores, remodels and technology, we have laid the groundwork for future long-term growth," Nordstrom said on the call.

For the first quarter, the company expects to earn 39 cents to 44 cents, including a 1- to 2-cent impact from the expensing of stock options. Analysts have the company pegged to earn 45 cents.

In full-year 2006, the company forecast earnings per share of $2.15 to $2.23, also including a 6-cent impact from stock option expenses. Analysts' consensus estimate is $2.24.

The retailer reported results after the market closed. Shares of Seattle-based Nordstrom closed down 0.4 percent at $40.12 in Thursday trading on the New York Stock Exchange. In after-hours trading, the stock fell 2.3 percent to $39.20.

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