NEW YORK — Nordstrom Inc. had one of those blessed quarters when virtually everything went right.
Forget this season’s retail villain of markdown pressure. In the second quarter, Nordstrom saw profits soar 81.3 percent on strong net and same-store sales growth, lower-than-planned expenses and what the firm called its “best operating margins in years.”
For the three months ended Aug. 2, the Seattle-based better department store chain said net income shot up to $65.9 million, or 48 cents a diluted share, eclipsing the Wall Street forecast by 9 cents. Last year, by comparison, the company registered profits of $36.3 million, or 27 cents.
With comparable-store sales up 3.9 percent on the success of Nordstrom’s annual half-year and anniversary sales, net revenues grew 8.4 percent to $1.79 billion from $1.66 billion a year ago. Sales exceeded the firm’s plan “by a sizeable chunk,” Nordstrom said.
“Strong sales momentum, along with inventory and expenses discipline, delivered our best operating margins in years,” said chief financial officer Michael Koppel on a conference call with analysts. “Sales trends were strong throughout the quarter, which provided expense leverage. All of our regions and merchandise categories comped positively.”
Among the bestsellers were cosmetics, accessories, women’s designer apparel and men’s wear, said Koppel. Women’s special sizes and kids’ were relatively weak, but still produced comp increases.
“Half-yearly and anniversary sales make this the second-highest volume quarter of the year,” said president Blake Nordstrom on the call. “We worked hard to improve our execution, and this is the third straight year of improving comps. Our merchants made the right buys and our customers responded.”
Nordstrom’s new inventory and information technology was critical to better sales and margins, as it allowed “the company to be more agile at chasing hot items and cutting back on slow movers,” wrote Wells Fargo Securities analyst Jennifer Black in a research note.
With strong comps and better execution, gross margin bucked the industry trend to expand 30 basis points to 33.6 percent of sales. More impressively, selling, general and administrative costs retreated 190 basis points to 28.1 percent of sales.Overall, for the first half of the fiscal year, profits skyrocketed, improving almost eightfold, or 690.8 percent, to $93 million, or 68 cents a diluted share. That compares with last year’s net income of $11.8 million, or 9 cents.
Sales for the six months increased 8.2 percent to $3.14 billion from $2.9 billion, and same-store sales comped up 1.6 percent.
In guidance, Nordstrom anticipates third-quarter earnings per share of 16 to 20 cents on a low-single-digit increase in comps. For the full year, the firm forecasts EPS of $1.33 to $1.37 on low-single-digit comp gains and a “slight improvement” in gross profit.
Earnings were released after the close of the market, but Nordstrom shares advanced 32 cents, or 1.4 percent, during the day Thursday to close at $24 in New York Stock Exchange trading.
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