Nordstrom Inc., fueled by strong sales highest in men’s, designer and jewelry categories, on Thursday reported first-quarter earnings rose 24 percent to $145 million, or 65 cents a diluted share.
This story first appeared in the May 13, 2011 issue of WWD. Subscribe Today.
That compares with net earnings of $116 million, or 52 cents, in last year’s quarter. The results included charges of 4 cents a share due to the March acquisition of the HauteLook membership-only flash sale Web site for $180 million in stock.
First-quarter same-store sales increased 7.8 percent, while net sales increased 12 percent to $2.23 billion. Stores in the South and Midwest were top performers.
The direct channel outpaced the overall Nordstrom increase. Nordstrom Rack outlets were up 1.2 percent on a same-store basis.
The Seattle-based upscale chain exceeded Wall Street expectations and met the high end of its own internal plans. But the stock dropped 1.8 percent, or 87 cents, to $48.30 after the company adjusted its year-end forecast down to $2.80 to $2.95 from previous guidance of $2.95 to $3.10, due to the purchase of HauteLook, which should break even this year. Same-store sales are seen increasing 2 to 4 percent for the year.
“We’re off to a good start in 2011,” said president Blake Nordstrom during a conference call. “We are continuing with comp-store increases and earnings growth.”
“Designer really across the board for us has been excellent,” added Pete Nordstrom, president of merchandising, who cited dresses and contemporary styles as among the standouts. “We are selling bridge to upper-priced products really well.…Our customer clearly tells us they prefer to buy new, full-price merchandise [rather] than old discounter merchandise.”
Men’s wear, he added, is making up for lost ground in recent years and “could be the biggest growth factor.” With full price selling going well, there will be less merchandise for Nordstrom’s anniversary sale in July, which is a huge volume generator. However, the “Encore” large size category has not been as robust as other categories, Pete Nordstrom noted.
Nordstrom could make some bold moves this year, including announcing full-line locations in Manhattan and Canada, where the company is aggressively eyeing sites. It has not given any timetable for possible announcements.
In Manhattan, Nordstrom is eyeing the West Side, specifically the Hudson Yards mixed-use project under development between 30th and 33rd Streets and 10th Avenue and the West Side Highway, and 3 Columbus Circle, an office building that could be demolished and converted to retail space. In Canada, Nordstrom is considering Toronto or Vancouver, but sites are not easy to come by.
Among the moves that are in the works this year, and cited by executives at the company’s annual meeting Tuesday and during the conference call:
• By July, 5,000 to 6,000 associates (and “significantly more” by year end) will have mobile devices to check out customers paying by credit card so they can avoid lines. Handheld devices will also help associates communicate with customers even when they’re in dressing rooms and search for items that could be out-of-stock on premises but elsewhere in the chain. IPads are being used to show customers merchandise that may not be in the store but is available for home delivery, and e-mail receipts are also being sent out.
• Nordstrom will more than double its personal stylists to 985 chainwide this year.
• Three full-line units and 18 Racks will open this year.
• At 350 West Broadway, in Manhattan’s SoHo neighborhood, Nordstrom will open this fall a small store purely for charity, called Treasure & Bond.
The $9.3 billion Nordstrom ended the first quarter with $1.4 billion in cash and will make much of it available to enhance systems, stores and service.