Nord­strom posts strong profit but mea­gre sales gains

National Post (National Edition) - - FINANCIAL POST - Anne D’in­no­cen­zio

NEW YORK• Up scale depart­ment store chain Nord­strom Inc. on Thurs­day re­ported bet­ter-than-ex­pected profit and to­tal rev­enue for the first quar­ter.

But sales at its es­tab­lished stores — a key mea­sure of a re­tail­ers’ health — showed mea­gre gains.

Shares in the Seat­tle-based com­pany fell seven per cent in af­ter-mar­ket trad­ing.

Depart­ment stores have been un­der fi­nan­cial pres­sure as more peo­ple shop on­line at off-price re­tail­ers or spend less money over­all on cloth­ing, which makes up a big part of their busi­ness.

Against a tough en­vi­ron­ment, the Nord­strom fam­ily — in­clud­ing co-pres­i­dents Blake, Peter and Erik Nord­strom — have of­fered take the com­pany pri­vate so they could man­age its rein­ven­tion away from the watch of the pub­lic mar­kets.

But in March, the com­pany re­jected the of­fer — US$50 in cash for each share of the com­pany that the fam­ily doesn’t own, plus the same price for about 21 per cent of the com­pany that the in­di­vid­ual fam­ily mem­bers own. In to­tal, fam­ily mem­bers, who are de­scen­dants of founder John W. Nord­strom, own about 30 per cent of the com­pany.

Mean­while, Nord­strom is ex­per­i­ment­ing with new con­cepts to win back shop­pers. It opened a store in Los Angeles that doesn’t have any in­ven­tory. It’s be­ing staffed by per­sonal stylists who can or­der mer­chan­dise for cus­tomers. It just opened its first Man­hat­tan store — a men’s cloth­ing store — that has ser­vices like same-day de­liv­ery for a US$20 fee and self-ser­vice kiosks for re­turns.

The depart­ment store chain earned US$87 mil­lion, or 51 cents per share, on rev­enue of US$3.56 bil­lion.

That beat the av­er­age Street es­ti­mate for earn­ings per share of 42 cents on rev­enue of US$3.47 bil­lion, ac­cord­ing to Zacks In­vest­ment Re­search.

In its full-price divi­sion, which con­sists of Nord­strom U.S. full-scale stores, Nord­strom.com and Trunk Club, rev­enue at stores com­pa­ra­ble sales rose 0.7 per cent. The top-rank­ing mer­chan­dise was chil­dren’s and men’s cloth­ing.

In the off-price sec­tor, which con­sists of Nord­strom U.S. Rack stores, Nord­strom­rack.com/hautelook and Last Chance clear­ance stores, com­pa­ra­ble sales in­creased 0.4 per cent.

Nord­strom ex­pects ful­lyear earn­ings to be US$3.35 to US$3.55 per share, with rev­enue in the range of US$15.2 bil­lion to US$15.4 bil­lion.

An­a­lysts were ex­pect­ing prof­its of US$3.43 per share and rev­enue of US$15.7 bil­lion for the year, ac­cord­ing to Fac­tset.

In af­ter-hours ex­tended trad­ing, Nord­strom shares slid nearly US$3.61 to US$47.30 fol­low­ing the earn­ings re­port.

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