LOS ANGELES (Reuters) - Upscale department store chain Nordstrom Inc <JWN.N> on Monday reported third-quarter earnings that topped a recently-lowered forecast, calming investor fears about a spending slowdown among affluent consumers.
By Nichola Groom
LOS ANGELES (Reuters) - Upscale department store chain Nordstrom Inc <JWN.N> on Monday reported third-quarter earnings that topped a recently-lowered forecast, calming investor fears about a spending slowdown among affluent consumers.
Its shares rose 12 percent in after-hours trading.
Nordstrom also forecast fourth-quarter and full-year earnings above Wall Street estimates, and executives said sales of designer items, accessories and men's apparel are strong following two months of disappointing sales at established stores.
!ADVERTISEMENT!"All areas of our designer business continue to show strong results," Nordstrom President Blake Nordstrom said on a conference call with analysts. "We are best served not underestimating our customers."
Net income for the quarter ended November 3 rose 22 percent to $165.7 million, or 68 cents a share, from $135.7 million, or 52 cents a share, a year earlier.
Excluding a gain from the sale of its Faconnable business, a debt-related securitization deal and adjusting for a difference in the quarter's timing compared with a year ago, Nordstrom earned 57 cents a share, topping analysts' average target of 52 cents a share, according to Reuters Estimates.
One investor said the news came as a relief after disappointing results from coffee shop chain Starbucks Corp. <SBUX.O> last week stoked concerns about spending among more affluent U.S. consumers.
"The fear on the Street especially after Starbucks last week ... was that the high end was getting hit," said portfolio manager Patricia Edwards of investment firm Wentworth, Hauser and Violich in Seattle. "The rumored death of the high-end consumer is apparently wrong."
Nordstrom in October had cut its third-quarter outlook to a range of 50 cents to 53 cents a share from a prior forecast of 61 cents to 64 cents. It said at the time that same-store sales were expected to rise 2 percent to 4 percent in the quarter, down from an earlier expectation of 4 percent to 5 percent.
Same-store sales, which track sales at stores open at least a year, rose 2.2 percent in the quarter, the company said.
Total sales were $1.97 billion, up 5.3 percent. Analysts, on average, were expecting sales of $1.964 billion, according to Reuters Estimates.
Nordstrom also said it made progress on reducing its inventories during the quarter. Adjusted inventory per square foot was 2 percent higher than last year, and had been 7 percent higher at the end of the second quarter, Chief Financial Officer Mike Koppel said on the call.
For the current quarter, Seattle-based Nordstrom forecast earnings of 88 cents to 92 cents a share. On an adjusted basis, it said earnings would range between 93 cents to 97 cents, while analysts on average estimate 93 cents, according to Reuters Estimates.
For the full year, Nordstrom expects earnings of $2.87 to $2.91 per share. Excluding items, earnings are expected to be between $2.88 per share and $2.92 per share. Analysts were expecting earnings of $2.76 per share, according to Reuters Estimates.
Also on Monday, Nordstrom said it would add a moderate amount of debt. The move is expected to lower the company's weighted average cost of capital while maintaining its current credit ratings.
Nordstrom also said its board of directors authorized an additional $1 billion in share buybacks. The company bought back 16.4 million shares of common stock during the third quarter for about $750 million.
Nordstrom shares rose to $34.25 in extended trade after closing at $30.52 on the New York Stock Exchange.
(Additional reporting by Alexandria Sage)
(Reporting by Nichola Groom; Editing by Braden Reddall and Carol Bishopric)
