Nordstrom investors had a scare in July. Following a protracted string of sparkling results, the upscale fashion retailer turned in monthly...
Nordstrom investors had a scare in July.
Following a protracted string of sparkling results, the upscale fashion retailer turned in monthly sales that fell short of analysts’ expectations.
One analyst wondered aloud if the euphoria of the past couple years had eased a notch or two. Wall Street promptly pushed its stock down $3 in a single trading day.
But Wall Street’s jitters seem unfounded — at least for now. The Seattle-based company yesterday raised its full-year outlook after reporting a 39.3 percent jump in second-quarter profit.
Most Read Stories
- Seattle's newest apartments: 'prison cell' with no door for toilet
- This video of Marshawn Lynch narrating the 'Planet Earth II' iguana chase wins the internet
- ‘A fairly messy situation’: 2-4 inches of snow could fall Thursday in Seattle area
- Former Seahawk Ricardo Lockette stirs anger at Garfield High assembly: ‘Men take the lead’
- Boeing blindsided as Trump slams Air Force One costs
Nordstrom reported income of $148.9 million, or 53 cents a share, exceeding analysts’ average estimates by a nickel. Sales, meanwhile, rose 7.8 percent.
Same-store sales — a key retail gauge for stores open at least a year — rose 6.2 percent for the quarter, based on strong selling of regular-priced items and an initially favorable response to fall merchandise.
All of this was the byproduct of the company’s continual effort to refine its inventory selection. Choosing handbags, designer jeans and shoes in the right styles, quantities and colors has enabled the company to sell more of these items at full price.
The company’s gross margin — the difference between what it pays for a product and what it charges to consumers — has widened as a result, from 34.9 percent to 36 percent, for the quarter.
Nordstrom also raised its full-year profit forecast to a range of $1.80 to $1.90 a share, from $1.70 to $1.75.
“The relative weakness you saw in July was maybe not the cause for concern that some considered it to be, including myself,” said McAdams Wright Ragen analyst Dan Geiman. “Some of our fears were allayed.”
Company President Blake Nordstrom told analysts yesterday that the company may take advantage of locations shed by Federated Department Stores.
The Chicago-based chain announced plans last month to sell off 68 duplicate stores following its merger with May Department stores.
“We remain hopeful that ongoing consolidation will create opportunities,” Nordstrom said.
One analyst asked whether the high-end consumers would continue to drive sales in the fall, as they did in the spring and summer.
Translation: Is the luxury bubble ready to pop?
Blake Nordstrom said other retailers read too much into its July sales results, thinking there must be some change taking place.
“We know it doesn’t last forever,” he said. “But there’s nothing in our end that indicates any change that would warrant changing our plans or approach to the business.”
Nordstrom’s stock fell $1.48 to $31.12, and gained 88 cents in extended trading. The company announced its financial results after the bell.
Monica Soto Ouchi: 206-515-5632 or email@example.com
|Dollar figures in thousands, except per share; parentheses denote losses|