Nordstrom Inc. reduced its markdown exposure in the third quarter, helping it to boost profits and beat analysts’ expectation but a hair.
In the three months ended Oct. 28, the Seattle-based upscale retail chain posted net income of $135.7 million, or 52 cents a diluted share, 1 cent above analysts’ consensus estimates. The performance was 26.3% above year-ago income of $107.5 million, or 39 cents.
Sales in the period ramped up 12.4%, to $1.87 billion from $1.67 billion in the 2005 period, and rose a robust 10.7% on a same-store basis.
Gross profit was up 156 basis points, to 38% of sales from 36.5% one year ago. Nordstrom said the improvement was “driven primarily by lower markdowns, particularly in women’s apparel.”
In releasing its numbers after the close of the equity markets on Monday, Nordstrom also disclosed plans for three new stores and, in Utah, one relocated unit. All four stores will measure 140,000 square feet. The units are to be located in the Fashion Place in Murray, Utah; in the Kenwood Towne Centre in Cincinnati, Ohio; in the St. Louis Galleria in St. Louis, Mo.; and in the Christiana Mall in Wilmington, Del. The openings will begin in the spring of 2009 in Utah and conclude in the spring of 2011 in Delaware.
Nordstrom projected fourth quarter earnings per share in a range of 79 to 84 cents with same-store sales in the low single digits.
Analyst Jennifer Black, of Jennifer Black & Associates, commented in a research note, “Nordstrom, as usual, has taken a conservative stance in regard to the company’s outlook in comp-store sales growth for the fourth quarter. We feel there is additional room for gains in the operating and gross margin in the fourth quarter relative to management’s expectations.”
Furthermore, she said that “Nordstrom could be the number-one destination for its core customer.”
Net income for the nine months was up 23.5% to $445.7 million, or $1.67 a diluted share, from $360.9 million, or $1.30, a year ago. Sales were up 9.3%, to $5.93 billion from $5.43 billion, and ahead 7.2% on a comp basis.
Nordstrom operates 157 fashion specialty stores in 27 states.