Improved top- and bottom-line results in the third quarter emboldened Nordstrom Inc. to raise its full-year guidance, but did not stop the high-end retailer from missing Wall Street estimates by 1 cent.
This story first appeared in the November 13, 2009 issue of WWD. Subscribe Today.
In the quarter ended Oct. 31, profits at Nordstrom grew 16.9 percent to $83 million, or 38 cents a diluted share, from $71 million, or 33 cents a share, a year ago.
Net sales in the three months climbed 3.5 percent to $1.87 billion from $1.81 billion. Comparable-store sales fell 1.2 percent.
Analysts polled by Yahoo Finance had, on average, expected earnings per share of 39 cents from the Seattle-based department store operator.
Based on its better third quarter and improved view for the remainder of the year, the firm increased full-year EPS guidance to the range of $1.83 to $1.88, implying fourth-quarter EPS of between 60 cents and 65 cents, from its previous full-year outlook of $1.50 to $1.65.
Nordstrom said that while comps at full-line stores fell 4.2 percent in the third quarter, same-store sales were up 3 percent at Nordstrom Rack and 16.4 percent in the direct-to-consumer channel. Fashion jewelry, women’s better apparel and shoes were categorical highlights in the three months, the company said.
Nordstrom Rack has posted three straight quarters of positive comps. The firm opened six of the clearance centers in the third quarter and said it will add two more doors under the nameplate in the current quarter.
Last week, Nordstrom reported a 6.5 percent gain in comps for October, the final month of the third quarter.
“The customer is continuing to have confidence issues and there’s no question that the economy and other key factors have had a dramatic impact,” said Blake Nordstrom, president of Nordstrom. “But what the customer is saying is if there is a compelling reason to shop, and if it’s predominantly around fashion and great product, then they’re responding.”
The company has maintained the cautious approach to inventory taken by many retailers during the downturn and said its quarter-end inventory level was down 10.7 percent on a per-square-foot basis.
“We’ve demonstrated that we can achieve an improvement in sales while maintaining inventory discipline and we’re confident we can have a solid flow of merchandise throughout the holiday season,” said Mike Koppel, executive vice president and chief financial officer.
In the first three quarters, the department store operator posted a 19.2 percent decline in profits to $269 million, or $1.23 a share, from $333 million, or $1.52 a share, in 2008. Revenues in the nine months slid 4.2 percent to $5.72 billion from $5.97 billion.
Nordstrom reported results after the markets closed Thursday. Shares closed down 1 percent at $34.51 and were off 5.2 percent in after-hours trading.