Nordstrom lowers outlook despite higher 2Q profit
The Seattle company is considered a barometer of luxury spending, but its shoppers apparently weren’t immune to the pressures felt in the broader economy.
The Associated Press
NEW YORK — Nordstrom on Thursday joined the ranks of major retailers cutting their profit outlooks for the year, citing disappointing sales from its more affluent shoppers.
The bleaker forecast from the department-store operator came despite a higher profit for the second quarter, which got a boost from the chain’s Anniversary Sale.
Its stock fell $1.47, or 2.5 percent, to $57.86 in after-hours trading Thursday.
Macy’s and Wal-Mart Stores, the world’s biggest retailer, also cut their outlooks for the year in reporting their quarterly results. But Nordstrom’s move raises concerns about more affluent consumers, whose spending has been rebounding since the recession.
The Seattle company is considered a barometer of luxury spending, and growth in the sector is seen as a good sign for the economic recovery. But its shoppers apparently weren’t immune to the pressures felt in the broader economy.
Nordstrom also is grappling with new demands from shoppers armed with smartphones. That’s pushing the retailer, considered the gold standard in customer service, to make changes such as offering free shipping for online orders.
Additionally, the company is looking for growth beyond the U.S. and is heading to Canada starting next year.
Nordstrom’s direct division, which includes its website and catalog, posted a 37 percent increase in second-quarter sales.
Nordstrom has a warehouse in Cedar Rapids, Iowa, to fill online orders and is building another so-called fulfillment center in Southern California, with completion expected for this fall. The company said it also is working on plans to open a third warehouse on the East Coast in 2015.
For the quarter, Nordstrom said sales at stores open at least a year rose 4.4 percent. But for its luxury department stores, the measure slipped 0.7 percent. It said the Southeast and Southwest delivered the strongest results.
For the quarter through Aug. 3, the company says it earned $184 million, or 93 cents per share, topping the 88 cents per share analysts expected. In the same period a year ago, Nordstrom earned $156 million, or 75 cents per share.
Revenue rose 6 percent to $3.2 billion, but was short of the $3.29 billion Wall Street expected, according to FactSet.
The company now expects sales at stores open at least a year to rise 2 to 3 percent, compared with its previous outlook of 3 to 5 percent.
Its earnings are expected to be $3.60 to $3.70 per share. That’s down from its previous forecast of $3.65 to $3.80 per share. Its stock is up 5 percent over the past 12 months.
Seattle Times business reporter Amy Martinez contributed
to this report.