Nordstrom Inc. reported Thursday that its third-quarter net earnings dropped to $67 million compared with $114 million during the same period in fiscal 2017, largely due to a credit-related charge.
Excluding the estimated $49 million charge, earnings were relatively flat and slightly exceeded the company’s expectations, reflecting “continued top-line strength” at its full and off-price businesses, the company said.
The charge resulted from some delinquent Nordstrom credit card accounts being charged higher interest in error. The company said it has taken action, including the appropriate steps to address this issue and estimates that less than 4 percent of Nordstrom cardholders will receive a cash refund or credit to outstanding balances, with most receiving less than $100.
Total sales increased 3 percent to $3.75 billion from $3.63 billion a year ago. Comparable sales increased 2.3 percent.
Nordstrom’s digital sales grew 20 percent last quarter and now represent 30 percent of sales.
The Nordstrom Rack off-price business exceeded expectations with a comparable sales increase of 5.8 percent in the third quarter.
At the full price department stores, Nordstrom’s comparable sales increased 0.4 percent.
Earnings before interest and taxes were $105 million, or 2.9 percent of net sales, compared with $208 million, or 5.9 percent of net sales, during the same period in fiscal 2017.
At the end of the third quarter, inventory increased 7 percent over the same period last year, reflecting timing shifts associated with the holiday season. Excluding this timing impact, inventory growth was relatively in line with sales growth, the company said.