Reward Programs Come Back to Bite Nordstrom in the Ass
First-quarter earnings at upscale department store operator Nordstrom (NYSE:JWN) missed the mark by 5 cents, though revenue matched analyst expectations. Nordstrom reported net earnings of $149 million, or 70 cents per diluted share, an increase of 2.9 percent from the same quarter last year. Revenue came in at $2.53 billion, an increase of 13.7 percent from $2.23 billion during the same period in fiscal 2011.
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The company said gross profit fell because of enhancements made to the company’s rewards program and a reduction in shipping revenue as a result of launching free shipping and free returns for online purchases. The company is hoping to expand its online selling initiatives further during the year and expects retail selling expenses to increase to $340 million for the full fiscal, an increase of $10 million from the earlier prediction.
Same-store sales increased 9.3 percent, with merchandise including both men’s and women’s shoes and handbags performing the best. The south and Midwest regions of the country were the top-performing geographic areas year-over-year. Net sales at Nordstrom Rack, the lower-priced segment of the company, saw a 20 percent growth to $91 million.
Nordstrom affirmed its full-year earnings forecast, and still expects a profit of $3.30 to $3.45 per share and same-store sales to rise 4 to 6 percent.
Earlier on Thursday, the company’s board had approved a quarterly dividend of 27 cents per share for its investors.