Bloomberg News

Nordstrom Profit Tops Estimates as Online, Outlet Sales Rise (3)

May 16, 2014

Nordstrom Inc. (JWN:US), the largest U.S. luxury department-store chain, posted profit that topped estimates, helped by sales at its lower-priced Rack outlets and online. The shares rose the most in five years.

Net income was $140 million, or 72 cents a share, in the quarter ended May 3, down slightly from $145 million, or 73 cents, a year earlier, the Seattle-based company said in a statement yesterday. That compared with the average analyst projection of 68 cents a share.

Nordstrom and other U.S. retailers have worked to keep costs down after severe winter weather and a sluggish holiday season forced them to deepen discounts. The company relied on e-commerce and outlet sales for growth last quarter, helping boost total revenue by 6.6 percent, ahead of projections.

The stock jumped 15 percent to $70.55 at the close in New York, the biggest one-day gain since April 2009. Nordstrom has advanced 14 percent this year, compared with a 1.6 percent gain for the Standard & Poor’s 500 Index.

Revenue rose to $2.93 billion from $2.75 billion a year earlier, compared with the average analyst estimate of $2.87 billion.

The company also affirmed its forecast for fiscal 2014, which ends early next year. Profit will be $3.75 to $3.90 a share. The average of 31 analysts’ estimates compiled by Bloomberg was $3.86.

Catalog Sales

Nordstrom said its e-commerce and catalog net sales jumped 33 percent last quarter after advancing 25 percent a year earlier. Net sales at the retailer’s Rack outlets climbed 20 percent, while sales at Nordstrom’s department stores open at least a year slid 1.9 percent.

Selling, general and administrative expenses rose 5.4 percent to $844 million, a slower rate than revenue growth.

Nordstrom, which is incurring more expenses by rolling out stores in Canada starting later this year, also said it’s seeking a financial partner for its $2 billion credit card portfolio. Goldman Sachs Group Inc. and Guggenheim Securities LLC are advising it on the process.

The chain is belatedly following other major retailers, including Macy’s Inc. and Target Corp., in making such a move. Nordstrom will continue to control the business to maintain the quality of its customer service, executives said on a conference call yesterday.

Credit card revenue advanced 2.2 percent to $94 million in the latest quarter.

Nordstrom’s shares retreated 0.5 percent this year through yesterday, compared with a 1.2 percent advance for the Standard & Poor’s 500 Index.

To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Kevin Orland, John Lear


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Companies Mentioned

  • JWN
    (Nordstrom Inc)
    • $76.36 USD
    • 0.95
    • 1.24%
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