Nordstrom's earnings sluggish

Published: Tuesday, Feb. 27 2007 12:30 a.m. MST

Customers wait to buy beverages at Nordstrom in Murray. Nordstrom earnings rose less than estimates.

Douglas C. Pizac, Associated Press

Enlarge photo»

Nordstrom Inc., the Seattle-based chain of 98 department stores, reported earnings that rose less than analysts estimated after it increased bonuses for executives who met performance goals.

The company forecast first-quarter earnings of as much as 54 cents a share, also trailing analysts' estimates, and the shares fell 4 percent in extended trading.

"One of the things you have to know about this company is they are continually guiding down and guiding back up again," said Patricia Edwards, a Seattle-based money manager at Wentworth, Hauser & Violich, with $7.9 billion in assets under management. "We are expecting that the upper-income consumer is going to continue spending."

In the fourth quarter, the company benefited from demand for women's clothes as President Blake Nordstrom added higher-end items from designers Giorgio Armani and Marc Jacobs. That helped drive an 8.3 percent jump in sales last year at stores open for at least a year. Same-store sales may rise as little as 3 percent next year, the company said Monday.

Net income climbed to $232.3 million, or 89 cents a share, from $190.4 million, or 69 cents, a year earlier. Sales in the fourth quarter, which ended Feb. 3, rose 15 percent to $2.63 billion.

Shares of Nordstrom fell $2.29 to $54.31 in trading after the close of the New York Stock Exchange. They fell $1.49, or 2.6 percent, to $56.60 during regular trading Monday, before the results were released. The stock climbed 32 percent in 2006.

The compensation costs cut fourth-quarter profit by 2 cents a share. The company was projected to earn 90 cents a share in the fourth quarter, the average of 14 estimates compiled by Bloomberg. Analysts had estimated first-quarter profit of 57 cents.

Nordstrom's same-store sales growth last year exceeded the 6.8 percent gain at Neiman Marcus Group Inc. and trailed a 9.9 percent increase at Saks Inc. The figures include online and catalog shopping.

Nordstrom is selling more women's clothes designed to be worn to the office and is broadening its selection of petite pants, tailored for women who are shorter than average. Blake Nordstrom, 46, also is expanding the selection of high-end designer clothes at a quarter of the company's department stores. He added designer goods to the retailer's Web site this year.

"The results in women are so far encouraging because it demonstrates that we were heading in the right direction," Blake Nordstrom said on a conference call. "Designer has been an important part of the mix in the past few years. It too has contributed greatly."

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