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Better control of expenses and improved inventory management along with high gross margin pushed Nordstrom Inc.'s profits up 25.6 percent on an 8 percent sales gain for the first quarter.

NEW YORK — Better control of expenses and improved inventory management along with high gross margin pushed Nordstrom Inc.’s profits up 25.6 percent on an 8 percent sales gain for the first quarter.

Net income for the quarter ended April 29 jumped to $131.2 million, or 48 cents a diluted share, from $104.5 million, or 38 cents, in the prior year on sales that climbed to $1.79 billion from $1.65 billion. Same-store sales showed a 5.4 percent gain for the quarter. The gross margin rate rose to 37.2 in the quarter, which compares with 36.8 percent last year.

“We are pleased to report the results of the first quarter, which show steady progress toward our goal of both increasing same-store sales and improving operating efficiency,” said Blake Nordstrom, principal executive officer and president of the Seattle-based department store retailer, on a conference call to analysts. “By controlling expenses and leveraging above-planned sales, our [selling, general and administrative] expense rate fell to 27.7 percent, which is the third consecutive year of reserve in the first quarter.”

Nordstrom went on to say that the company’s top priority continues to be gaining market share by getting customers to “spend in the categories of merchandise we offer.” One segment that may draw shoppers in is women’s wear, the executive said.

“Our merchants continue to leverage perpetual inventory tools to make better and informed buying decisions,” Nordstrom said on the call. “As we gain more insight over time, we’re able to focus our resources in a way that is most meaningful to our customers. Along these lines, women’s apparel represents an opportunity for us to gain market share.”

Regarding designer goods, the retailer remains bullish on its market position and merchandise offering. “We define our designer business as carrying the most aspirational and most coveted brands at the very top of the luxury scale,” Nordstrom explained. “Designers are present in all of our full-line stores, [and] we’re working to enhance our apparel, footwear and accessories offerings in roughly a quarter of our stores. The importance of designer merchandise to our customers and our stores cannot be understated in terms of creating inspiration and excitement for newness across all categories.”

This story first appeared in the May 19, 2006 issue of WWD. Subscribe Today.

Regarding the first-quarter results, Michael Koppel, executive vice president and chief financial officer, said on the call that the company’s strongest regional performances “were in the Southern states and the Northwest, and our best-performing merchandise divisions were accessories, cosmetics and men’s apparel.”

Koppel said the 40-basis-point gain in gross margin was above the company’s own expectations. “Merchandise margin versus last year was flat, which was in-line with our plans,” the cfo said. “We experienced overplanned markdowns in women’s apparel that was offset by strong sales and margin across other major categories. Above-planned sales leverage on buying and occupancy expense created a rate expansion.”

The cfo said the expanded gross margin was “partially offset by an additional $3 million due to stock option expense.”