Nordstrom profit rises once again
The Seattle-based department-store chain was able to move more merchandise without resorting to lots of discounts, bolstering its fourth-quarter profit
Seattle Times business reporter
Even in the midst of economic turmoil, holiday shoppers apparently could not turn away Nordstrom's pricey handbags, makeup and designer labels.
The Seattle-based retailer posted a 12.5 percent increase in retail sales for the three months ending in January, marking its fifth consecutive quarter of double-digit, year-over-year revenue growth.
Once again, Nordstrom seemed to benefit from an affluent customer base that's less affected by a sluggish economic recovery than the lower-income shoppers of some other department-store chains.
"Our regular-price selling remains at historically high levels," President Blake Nordstrom told analysts in a conference call Thursday.
The company reported a fourth-quarter profit of $236 million, or $1.11 a share, representing a 1.7 percent increase from a year ago. Although that beat expectations, Wall Street was disappointed with Nordstrom's cautious outlook, and shares slid in after-hours trading after the earnings report.
Nordstrom projected a 4 to 6 percent increase in sales at stores open more than a year for 2012, down from a 7.2 percent rise in 2011.
The biggest gain came from its direct-to-consumer business, up nearly 30 percent from the year before.
Nordstrom, which has been spending heavily to secure its online future, told analysts Thursday it plans to continue investing in its e-commerce business over the next year.
The company is testing a local same-day delivery service and working to improve its website, adding personalization features and expanding its merchandise selection, executives said. That's on top of the company's launch last August of free shipping for online orders of any size and the purchase of Los Angeles "flash-sale" website HauteLook a year ago.
"It's going to be a period of investment, and that will depress earnings growth a little bit in 2012," said analyst Dan Geiman of McAdams Wright Ragen in Seattle. "But it should pay off in the long-term."
Nordstrom plans to spend $140 million, or 30 percent of its capital expenditure budget, on e-commerce improvements this year. That's up from $100 million, or 20 percent, last year.
As a result, it expects to add nearly 400 employees to its e-commerce operations in Seattle.
The company said it will open one new full-line clothing store and 15 off-price Rack stores this year. It currently has 117 full-line stores and 105 Racks.
Although it's been looking for more than a year to expand to Canada, the company has yet to find a suitable location there, said Erik Nordstrom, president of stores.
"It's a real-estate question, and at this point, we haven't answered that one," he said.
Nordstrom released its results after Thursday's regular trading session. The stock closed up $1.18, or 2.3 percent, to end at $52.18. Shares slid 11 cents, or less than 1 percent, to $51.78 in after-hours trading. The stock has traded between $37.28 and $53.35 in the past 52 weeks.
Amy Martinez: 206-464-2923 or firstname.lastname@example.org