Nordstrom reported upbeat third quarter sales benefitting from the timing of a key sales event but swung to a loss thanks to an impairment charge tied to TrunkClub, which the department store acquired in 2014.
Nordstrom shares, which finished the day 7.2 per cent higher, rose another eight per cent in extended trading to $60 after the Seattle-based company said total revenues rose 6.4 per cent to $3.5bn, modestly ahead of estimates.
Like-for-like sales, a key industry metric, rose 2.4 per cent, benefitting from the timing of its one week Anniversary sales that shifted to the third quarter.
However, Nordstrom swung to a loss of $10m or six cents a share, compared with a profit of $81m or 42 cents a share in the year ago period. Its net income was impacted by a non-cash goodwill impairment of $197m tied to TrunkClub, the personal styling service provider it acquired in 2014.
Adjusting for one-time items, earnings of 84 cents, eclipsed expectations for 51 cents. Moreover, the company’s gross profit margin climbed 93 basis points year-on-year to 34.8 per cent.
Nordstrom’s results follow upbeat commentary from other department stores like Macy’s and Kohl’s on Thursday. Department stores had come under pressure from a rise in online shopping and off-price stores like TJX Cos, which sells discounted brands for cheap. But they have also benefitted from weaker year-ago comparisons in the third quarter.
The company had previously forecast full-year earnings in the range of $2.60 to $2.75 a share. Excluding the impairment charge, Nordstrom now expects to earn between $2.85 to $2.95 a share. Including it however, it expects to earn between $1.70 to $1.80 a share.
Meanwhile, net sales are expected to climb about 3.5 per cent, in the middle of its previous outlook, which called for between 2.5 and 4.5 per cent growth.
Nordstrom shares are up 12.5 per cent so far this year.
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