Nordstrom continued a day of relatively heartening news for department stores Thursday as the upscale retailer reported adjusted earnings and sales that beat Wall Street estimates, even as it took a substantial write-down for an online company it bought just two years ago.
The results for the period ended Oct. 29 marked the second consecutive quarter of better-than-expected results, after several quarters of misses amid an overall retail plunge.
Nordstrom reported adjusted earnings per share of 84 cents on sales of $3.54 billion. On that adjusted basis, Wall Street analysts were expecting 51 cents on $3.48 billion in revenue.
But a $197 million write-down for its 2014 Trunk Club purchase resulted in a quarterly net loss of $10 million or 6 cents per share.
A year ago, the company reported earnings per share of 42 cents on sales of $3.33 billion.
The company’s full-line brick-and-mortar stores open at least a year continued to see falling comparable sales — down 4.5 percent — while Nordstrom Rack’s comparable sales rose 0.9 percent.
Nordstrom.com sales rose 20.1 percent, while Nordstromrack.com/HauteLook sales rose 23.2 percent.
But not everything was rosy.
The goodwill impairment for Trunk Club, the online retailer Nordstrom bought for $350 million, indicates that acquisition is not doing as well as expected.
Trunk Club offers clothing suggested by a stylist and ships them to customers to try on. Initially launched as a service for men, the company expanded its offering to women in 2015.
In recent months, Nordstrom shut down a Trunk Club fulfillment center in Chicago, instituted a $25 at-home try-on fee (credited toward any items purchased) and cut the number of days customers could try on the clothing at home.
“While this business continues to deliver outsized top-line growth, current expectations for future growth and profitability are lower than initial estimates,” the company said in its earnings release.
Co-President Erik Nordstrom said in the earnings conference call with investors that the company is working on making Trunk Club better for customers, including being more accurate in what they put in the trunk shipments and connecting on a more consistent basis.
Excluding the impact of the write-down, Nordstrom raised its earnings outlook for the year from between $2.85 and $2.95 per share, up from its prior guidance of $2.60 to $2.75.
Including the impact of the write-down, the company lowered its fiscal year outlook to $1.70 to $1.80.
“Nordstrom has started its second half on a slightly more positive note, reversing the gloomy sales trends of the first part of the year,” said Neil Saunders, CEO of retail research-and-consulting firm Conlumino.
But, he cautioned, “as welcome as these numbers are, their strength is somewhat diminished by two considerations.”
Without the shift in the timing of the anniversary sale, Nordstrom’s growth for the quarter would have been lower.
The second factor is the $10 million net loss resulting from the Trunk Club impairment.
“Given that profits were already down going into this quarter, this has further weakened the year-to-date performance and means that Nordstrom will come in below expectations for the full year,” Saunders said.
Earlier Thursday, Macy’s reported results that fell below Wall Street expectations, but the company raised its sales outlook for the year after seeing an improvement in its third-quarter business.
Kohl’s reported quarterly profits that beat Wall Street expectations.
That news had already boosted Nordstrom shares by about 7 percent before the market closed. In after-hours trading — after the release of the earnings results — Nordstrom shares were up an additional 4 percent.
Fuente: Seattle Times
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