Nordstrom upgrades its profit outlook

Nordstrom Inc raised its forecast for earnings and revenue for the coming year, the latest sign that higherend US retailers are optimistic that affluent shoppers will keep spending even in an era of high inflation.

Net sales increased almost 19% to $3.47 billion in the fiscal quarter ended April 30, the department-store operator said in a statement on Tuesday. That’s above analysts’ average estimate of $3.27 billion.

Sales at both Nordstrom and its off-price Rack business were stronger than what analysts had been looking for.

Nordstrom now sees revenue growth, including credit-card sales, of 6% to 8% this year — an upgrade of a full percentage point from the company’s March forecast.

The results show the divergence among retailers catering to high-end clients and those selling to mass-market shoppers.

In recent weeks, a growing array of companies have downgraded their expectations for the year as higher costs eat into profits and inflation erodes the purchasing power of lower income shoppers.

“At this point, we have not seen inflationary cost pressures adversely impact customer spending, which we believe is due to the higher income profile and resiliency of our customer base,” Nordstrom’s chief financial officer Anne Bramman told analysts.

The fashion retailer raised its forecast for earnings per share to the range of $3.38 to $3.68, excluding the impact of share repurchase activity.

Nordstrom also booked a $10 million impairment charge related to its Trunk Club property, a service that’s similar to Stitch Fix and allows shoppers to try on clothes at home before they purchase them.

The retailer said it would wind that service down.

Nordstrom also announced that it would become a retail partner of Allbirds Inc, the sneaker startup that went public last year.

It will offer Allbirds products in select stores on June 1, with plans to sell them online later in the summer.