Nordstrom Boosts Full-Year Earnings Guidance (JWN)
Nordstrom Inc. (NYSE: JWN), an up-market department chain, lifted its outlook both on profit and sales for the full-year, as its popular discount rack stores continued to perform exceptionally well for the quarter even as it prepares for a rapid expansion of those in next four years.
The company has also upwardly revised its same-stores-sales outlook for the fiscal year ending January. While the earlier forecast on same-store-sales growth was between 4 and 6 percent, the revised estimate id for 6 to 7 percent growth.
For the quarter, though, same-store-sales in Nordstrom’s full service department stores rose moderately by 1.1 percent.
However, sales from rack stores climbed 7.7 percent in the second quarter. Buoyed up by rack stores sales, the company now plans to open 230 such stores by the end of 2016, up from 110 at present.
When asked about whether Nordstrom was very quick in expanding rack stores, or destroying its image of “luxury shopping” image due to discounted rack store products, Rack Chain’s President, Blake Nordstrom said in a conference call , “Trust us that we are very sensitive to the Nordstrom brand and the core business, the full line store. To date we think it’s been very complimentary.”
In the last fiscal year, sales generated from rack stores were 19.2 percent of the total retail sales.
In the fiscal second quarter ending July 28, Nordstrom’s net income stood at $156 million, or 75 cents per share, down from $175 million, or 80 cents per share, in the year earlier quarter. Overall, same-store sales rose by 4.5 percent in the same period.
Nordstrom also expects full-year earnings in the range of $ 3.40-$3.50 a share, up from earlier estimation of $3.30-$3.45 a shares.
Lately, in order to be more competitive, the company has been investing a great deal on improving technology capabilities and strengthening e-commerce business.
Although the U.S. economy is witnessing a sharp slowdown, prompting consumers to cut spending, upscale retail stores such as Nordstrom, Saks Inc, Neiman Marcus Group have continued to perform strongly as wealthy customers continued shopping.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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