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Nordstrom 2Q profit rises 20 pct, aided by demand from wealthy shoppers; outlook is raised
NEW YORK (AP) ' Nordstrom Inc. said its annual anniversary sale and wealthy shoppers' demand for its shoes, makeup and designer clothing helped its second-quarter net income rise 20 percent. The company also boosted its full-year profit outlook.
Its shares rose nearly 4 percent in aftermarket trading after closing up more than 5 percent amid a market rally. The Dow gained more than 400 points on the fourth day of wild market swings as investors ponder the future of the global economy.
Like many luxury stores, Nordstrom has seen sales rebound as affluent customers became more comfortable with splurging again. But the results do not cover the period since the Standard & Poor's downgrade of the federal debt late Friday. That led to more stock market turmoil and growing concerns about a double-dip recession. Analysts worry that the upscale retail market, which was the beacon in the industry, could get squeezed. Already, some designer stores are seeing slower traffic in the past two weeks amid the market turbulence.
"We're mindful of the economic challenges facing all of us," said President Blake Nordstrom during a call with analysts. "However, we know from previous experiences that our customers remain receptive when we're able to evolve with them and provide a compelling reason to buy something new."
Company officials declined to comment on how sales have fared over the past several weeks.
Nordstrom executives said they were focusing on new clothing items that shoppers can wear immediately rather than fall ensembles, as people continue to shop closer to need.
"The idea that a customer is going to buy something and stick it in their closet for two and a half, three months ... while some customers do that, not as many do as used to," said Peter Nordstrom, director and president of merchandising. One exception to that was fall boots, which were strong sellers during the annual anniversary sale in July.
The department store chain, based in Seattle, said it earned $175 million, or 80 cents per share, in the three-month period ended July 30. That compares with $146 million, or 66 cents per share, in the year-ago period.
Revenue rose 12.4 percent to $2.72 billion. Analysts had expected 74 cents on revenue of $2.72 billion. Top-performing categories included shoes, cosmetics, and designer clothing. Revenue at stores open at least a year, a key indicator of a retailer's health, rose 7.3 percent in the quarter.
The anniversary sale helped results significantly, Nordstrom said. Particularly successful was a program that gave Nordstrom card holders early access to the sale, he said.
The company also revamped its mobile web site in June to help improve direct-to-consumer sales.
"Direct is our fastest growing part of the business, which is reflective of how customers increasingly want to shop," Nordstrom said.
Nordstrom said it expects revenue at stores open at least a year to be up between 4 percent and 6 percent for the year. Nordstrom also predicted that earnings per share would be between $2.95 per share and $3.10 per share. That was up from the forecast, issued in May, of $2.80 per share to $2.95 per share. Analysts expect $3.04 per share for the year.
Shares rose $1.62, or 3.8 percent, to $43.95 in aftermarket trading. The stock closed up $2.19, or 5.5 percent, to close at $42.33 during the regular session.