Nordstrom Has Mixed Q4 Results

by MR Magazine Staff

NEW YORK – Nordstrom Inc. enjoyed double-digit growth in fourth-quarter and full-year earnings, but quarterly results fell short of analysts’ estimates and forward-looking guidance further tempered optimism.

In the three months ended Feb. 3, the Seattle-based specialty retailer posted net income of $232.3 million, or 89 cents a diluted share. While 22% above year-ago profits of $190.4 million, or 69 cents, the earnings per share figure fell a penny shy of the analyst consensus estimate of 90 cents.

Quarterly sales bounded 14.6% to $2.63 billion from $2.3 billion and same-store sales advanced 8.3%, far ahead of the company’s plan for growth of 1% to 3%. The same-store comparison excludes the 53rd week of selling in the more recent year. Fiscal 2005 was a 52-week year on the retail calendar.

Gross margin grew to 38.3% of sales from 37.5% in last year’s quarter. The company noted that margin improvements came as a result of “lower markdowns and higher sell-through of inventory, especially in women’s apparel.”

Nordstrom’s led investors towards first-quarter earnings guidance of between 51 and 54 cents a share, below the pre-existing 57-cent expectation, and full-year EPS of $2.87 to $2.84, well ahead of the $2.56 consensus estimate prior to the earnings report. Deborah Weinswig, broadlines analyst at Citigroup, called both figures “conservative, and we believe that the stock could continue [to] trade off in the near term as a direct result.”

Same-store sales are expected to grow between 3% and 4% during the new year.

For the full year, Nordstrom logged a 23% increase in net income, to $678 million, or $2.55 a diluted share, from $551.3 million, or $1.98. Sales grew 10.8% to $8.56 billion from $7.72 billion. Same-store sales were up 7.5%.

In addition to 98 full-line Nordstrom stores, the company operates 50 Nordstrom Rack units, one free-standing shoe store and two clearance outlets. It also owns four Faconnable boutiques in the US, which it is in the process of selling.