Seattle—Wall Street rewarded Nordstrom Inc. for its mostly positive first quarter report, sending its shares up more than 11% in trading today. On Thursday afternoon, the retailer said its quarterly profit was down from last year, but still beat estimates helped by sales increases at Nordstrom Rack and online.
Net revenue increased 6.8% to $2.84 billion from $2.66 billion last year, just missing analysts’ estimate for $2.86 billion in sales. Total comparable store sales were up 3.9%.
Rack, Online Sales Jump
Nordstrom comparable sales, which consist of the full-line and Direct (online) businesses, increased 3.3%. Top-performing merchandise categories included accessories, women’s shoes, and cosmetics.
Full-line comparable sales decreased 1.9% with the Southwest and Southern California regions as top-performing geographic areas.
Direct net sales increased 33% on top of last year’s first quarter increase of 25%, “driven by expanded merchandise selection and ongoing technology investments to enhance the online experience,” the company said.
Nordstrom Rack net sales increased 20% to $126 million, reflecting 27 store openings since the first quarter of fiscal 2013. Nordstrom Rack comparable sales increased 6.4%percent.
Gross profit, as a percentage of net sales, decreased 124 basis points compared with the same period last year, due to increased markdowns in response to heightened promotional environment as well as Nordstrom Rack’s accelerated store expansion and growth in the Nordstrom Rewards loyalty program.
Selling, general and administrative expenses rose 5.4% to $844 million, a slower rate than revenue growth.
The company also announced it would be looking for a partner for its Nordstrom credit card receivables, or bills that haven’t yet been paid. Those bills total about $2 billion. Nordstrom said the move would allow it to keep its focus on customers and increase its financial flexibility.
For its fiscal year, Nordstrom said it continues to expect net sales growth of 5.5% to 7.5% and earnings of $3.75 to $3.90 a share. Analysts forecast $3.85 a share.