Full-priced selling bolstered gross margins at Nordstrom Inc., leading to a 22 percent profit gain on a 14.6 sales increase for the fourth quarter. Year-end results were equally impressive for the Seattle-based department store.
For the quarterly period ended Feb. 3, Nordstrom posted net income that rose to $232.3 million, or 89 cents per diluted share, from $190.4 million, or 69 cents a share, in the prior year on sales that climbed to $2.6 billion from $2.3 billion. Same-store sales gained 8.3 percent, well ahead of the company’s estimate of an increase of 1 to 3 percent.
For the year, net earnings leaped 23 percent to $678 million, or $2.55 a share, from $551.3 million, or $1.98 a share, in the prior year on sales that rose 10.8 percent to $8.6 billion from $7.7 billion.
In a statement, the company said the gross margin rate for the quarter swelled 80 basis points to 38.3 percent versus 37.5 percent in the prior year. The retailer said strong “regular-price sales across all major merchandise categories throughout the quarter and a successful holiday season” drove sales, while the “merchandise margin improved versus the prior year, driven mainly by lower markdowns and higher sell-through of inventory, especially in women’s apparel.”
Results were released after the market closed Monday. At the close, shares of Nordstrom dropped 2.3 percent to $56.60, but lost another 3.3 percent in after-hours trading to $54.75. Retail shares across sector lost steam Monday after investors fretted the market was headed for a valuation correction. The S&P Retail Index shed 0.8 percent to 529.6 at the bell.
Michael Koppel, executive vice president and chief financial officer, said on a conference call that the company’s “operating model continues to perform consistently with increases in same-store sales and improvement in gross margin flowing through to the bottom line. Overall, these results indicate that we are creating value through the execution of our strategy and maintaining disciplines that will enable us to continue achieving higher levels of performance.”
Koppel said sales trends were “positive throughout the quarter with all of our major merchandise categories and geographic regions achieving same-store sales increases.” He went on to say that Nordstrom’s strongest performances by geography “were in the East Coast and Midwest regions, and our best performing merchandise divisions were our collective designer offering, which includes apparel, accessories and shoe categories, along with our men’s apparel division.”
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By way of guidance in the current first quarter, the company said it expects mid-single-digit comps growth. Earnings per share for the first quarter are pegged to be between 51 and 54 cents, which includes a 2 cent impact from expenses relating to a securitization transaction with Nordstrom’s credit card business.