Nordstorm’s Net Income Climbs 52%
Nordstrom Inc. said Tuesday that fiscal first-quarter profit jumped 52%, sailing past Wall Street’s expectations, as men, women and teenage girls helped drive the upscale retailer’s sales.
The company, which operates 28 Nordstrom and Nordstrom Rack stores in Southern California, also told analysts during a conference call that it expected continuing consolidation in the retail industry to provide it with fresh expansion opportunities, although it did not offer specifics.
“I think it’s pretty clear to everybody who’s paying attention to this what the potential opportunities are,” Chief Financial Officer Michael Koppel said.
Retail experts expect a rash of store closures by Federated Department Stores Inc. after it completes its acquisition of May Department Stores Co.; the transaction is expected to close in the third quarter. That could open up valuable retail space -- much of it in California -- for other chains to expand.
Independent retail analyst Jennifer Black says Nordstrom, which has performed well in the last couple of years as consumers have gravitated to higher-end stores, is in a strong position to pick and choose as real estate becomes available.
“The big-picture point is they’re going to be able to be opportunistic in selecting sites,” Black said. “If a great opportunity came along in an area that was underserved, I think they would take advantage of it -- both in and out of California.”
The Seattle-based retailer operates 151 stores in 27 states: 95 Nordstrom stores, 49 Nordstrom Racks, five Faconnable boutiques, one shoe store and a clearance store. It also operates 32 Faconnable sites internationally, most of them in Europe.
For the quarter ended April 30, Nordstrom said, earnings rose to $104.5 million, or 75 cents a share, from $68.7 million, or 48 cents, in the same period last year. A consensus of analysts polled by Thomson First Call had expected 70 cents a share.
Revenue rose nearly 8% to $1.7 billion. Sales at stores open at least a year, a key indicator of a retailer’s health, gained 6.2%.
Nordstrom said it expected to earn 85 cents to 90 cents a share in the current quarter and $3.40 to $3.50 for the fiscal year. Analysts were expecting 88 cents and $3.38, respectively.
Nordstrom shares rose $1.69 to $57.32, a 52-week closing high, on the New York Stock Exchange; the stock is up 23% for the year. The earnings were announced after the market close, and the shares climbed to $58.80 in after-hours trading.
Koppel, the chief financial officer, said sales were strong throughout the quarter as shoppers snapped up high-margin items such as cosmetics and accessories. Women buying designer brands helped lift sales, the company said, noting that it had been making more room for premium denim brands, which had been strong sellers.
Nordstrom has been installing systems that help it analyze sales so that it can do a better job of replenishing merchandise as needed, company President Blake Nordstrom told analysts.
“Today we have better information and better tools to help us deliver more of the right products to our customers,” he said.
