Feb 20, 2015
Nordstrom profit falls due to higher investments, discounts
Feb 20, 2015
Upscale department store operator Nordstrom Inc reported a lower-than-expected quarterly profit as it spent more on technology upgrades and store expansion, and increased discounts at its Rack brand stores in the holiday shopping season.
The company, which bought Chicago-based Trunk Club in August to gain market share in men's' clothing and to boost its online business, also forecast 2015 profit of $3.65 to $3.80 per share and sales growth of 7 to 9 percent.
Analysts on average were expecting a profit of $3.76 per share on revenue of $13.47 billion, according to Thomson Reuters I/B/E/S.
Nordstrom also forecast a bigger loss for its Canada business in 2015 as it continues its expansion with store openings in Ottawa in the spring and Vancouver in the fall.
Loss before interest and taxes in Canada is expected to widen to about $60 million in fiscal year 2015 from $32 million in 2014.
Nordstrom said margins fell in the fourth quarter as it tried to clear inventories with deeper discounts. Merchandise inventories, however, stood at $1.73 billion as of Jan. 31, higher than the $1.53 billion reported a year earlier.
Selling, general and administrative expenses rose 13.5 percent to $1.08 billion.
Nordstrom's net income fell to $255 million, or $1.32 per share, in the quarter ended Jan. 31, from $268 million, or $1.37 per share, a year earlier.
Same-store sales rose 4.7 percent. Analysts polled by Consensus Metrix had expected a growth of 3.4 percent.
Net sales rose 9 percent to $3.94 billion, helped by higher demand for its skincare and makeup products.
Analysts on average had expected earnings of $1.35 per share on revenue of $4.01 billion, according to Thomson Reuters I/B/E/S.
The company's shares were slightly up at $77.50 in extended trading.
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