News Column

Nordstrom beats forecast, stock surges

May 15, 2014

By Amy Martinez, The Seattle Times



May 15--As other retail stocks slipped Thursday, shares of Nordstrom surged more than 10 percent in late trading after the Seattle company reported better-than-expected earnings.

Nordstrom posted a first-quarter profit of 72 cents a share, beating its previous outlook of 60 to 70 cents.

The company also said it will seek a financial partner for its Nordstrom credit-card business, which has about $2 billion in receivables.

Nordstrom's stock shot up $6.51, or 10.6 percent, to $68 late Thursday after the earnings report, surpassing the upper end of its 52-week range of $54.90 to $64.19.

Nordstrom said its first-quarter profit declined to $140 million from $145 million a year ago, due to planned technology upgrades and its upcoming expansion into Canada. The retailer will open its first Canadian store in September in Calgary.

Nordstrom's quarterly revenue rose about 7 percent to $2.9 billion, led by growth of its discount Rack chain and online business.

Sales at Rack stores open at least year increased 6.4 percent, while sales at established full-scale Nordstrom stores declined 1.9 percent.

The company's better-than-expected earnings report stood in contrast to disappointing results at other retailers Thursday.

Wal-Mart Stores reported lower quarterly earnings and warned that the outlook isn't much better for the current period. Shares of Kohl's also fell after the department-store operator announced a drop in first-quarter earnings.

Nordstrom said finding a partner for its credit-card business would give it greater financial flexibility, with no expected change to customers' experience and only a "minimal impact" on operations and jobs.

The company's in-house credit portfolio is a rarity in today's retail industry as most major department-store chains over the past decade have farmed out management of their credit cards to partner banks, which absorb the risk in exchange for sharing the profits.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com. On Twitter: @amyemartinez

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(c)2014 The Seattle Times

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Source: Seattle Times (WA)


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