Seattle—Shares of Nordstrom dropped Thursday after the retailer reported weaker-than-expected first quarter earnings due to cold weather that hurt sales early in the quarter.
For the quarter ended May 4, the high-end retailer posted a 2.7% decline in profit to $145 million, or 73 cents a share, compared to $149 million, or 70 cents a share, a year ago. That missed analysts’ average estimate for 76 cents a share.
Net revenue increased 4.7% to $2.75 billion but missed analysts’ estimate for $2.81 billion. Comparable store sales were up 3.1%.
Top performing categories included cosmetics, women’s apparel and handbags. Northern California and Southwest regions were the top performing geographic areas. And direct, which includes online, posted a 25% sales increase on top of a 44% increase a year ago.
Nordstrom Rack posted a 10% sales increase reflecting 16 new store opening since first quarter last year. Comparable store sales increased 0.8% on top of a 6.8% increase in the year-ago quarter.
Gross profit, as a percentage of net sales, decreased 50 basis points compared with the same period in fiscal 2012 due to higher occupancy costs in the Rack division’s expansion combined with lower than planned sales volume. The decrease was also due to higher expenses associated with the growth in the Fashion Rewards program, the company said.
Nordstrom blamed “particularly soft” sales during the first two months of the quarter with seasonal merchandise and was particularly hard hit in the Northeast, Mid-Atlantic and Midwest regions.
But business had started rebounding by April and into second quarter, which includes the company’s annual anniversary sales on July 19.
Nonetheless, while Nordstrom reiterated its full year profit forecast for $3.65 to $3.80 a share, the company edged its total sales down. It now expects comparable store sales to increase 3% to 5% this year, compared to 3.5% to 5.5% previously.
“Nordstrom did well. They just didn’t do great,” said Richard Jaffe, analyst at Stifel Nicolaus & Co.