NEW YORK — In the latest sign that consumers crave luxury, Nordstrom Inc.’s first-quarter profits ballooned 153.1 percent on double-digit same-store and net sales gains.
For the three months ended May 1, the Seattle-based upscale department store operator boasted net income of $68.7 million, or 48 cents a diluted share, which buried Wall Street’s estimate by a nickel. That compares with earnings of $27.2 million, or 20 cents, in the prior-year period.
Net sales advanced 15 percent to $1.54 billion from $1.34 billion a year ago, and comparable-store sales jumped 13.2 percent, marking Nordstrom’s fourth consecutive quarter of comp growth.
While Nordstrom’s strong sales and comps were a testament to its ability to feed consumers’ insatiable appetites for high-end merchandise and customer service, president Blake Nordstrom credited the huge profits to another factor, which, if more prosaic, was just as important: new technology.
“Today, the decisions of our merchants are informed by a wealth of information we didn’t have just two to three years ago,” said Nordstrom on a conference call with analysts and investors.
Investments in new inventory tracking technology and other systems allowed the company to convert those sales and comp increases into outsized cost leverage. Gross margin, for example, expanded 320 basis points as a percentage of sales while selling, general and administrative costs receded 180 basis points by the same measure.
Given the relative infancy of Nordstrom’s systems, management and analysts see even greater profit-building benefits accruing in the future.
“Our read is that president Blake Nordstrom’s Nordstrom is early in terms of enjoying the fruits of the technological imperative, as it were, with palpable early financial success serving as the proverbial ‘carrot’ to spur future successes,” wrote A.G. Edwards & Sons analyst Robert Buchanan in a research report.
Moreover, given Nordstrom’s “mounting prowess” with its automated systems, Buchanan foresees “substantially higher operating margins on a go-forward basis,” making the company’s future — and its stock — “compelling.”