Nordstrom reported mixed third-quarter results as its income took a big hit due to an unexpected charge related to its store credit card even as its sales continued to increase.
Net income fell 42% to $67 million, or 38 cents a share, during the period ended Nov. 3, compared with $114 million, or 67 cents a share, in the year-ago period. Analysts had expected earnings of 66 cents a share.
Nordstrom took a one-time charge of $72 million, or 28 cents a share, to refund customers whose delinquent credit-card accounts were mistakenly charged a too-high interest rate. The retailer said it has taken action to address this issue. It estimates that less than 4% of Nordstrom cardholders will receive a cash refund or credit to outstanding balances, with most receiving less than $100.
Excluding an after-tax impact of $49 million for the estimated credit-related charge, earnings were relatively flat and slightly exceeded the company’s expectations, reflecting “continued top-line strength” at its full and off-price businesses, Nordstrom said.
Total sales increased 3% to $3.75 billion, more than analysts had expected. Nordstrom’s revenue was impacted by a shift in the retailer’s Anniversary Sale event to the second quarter this year. The annual event is one of the department store’s biggest sales promotions
Total company same-store sales rose 2.3%. Full-price comparable sales rose 0.5%, while Nordstrom’s off-price business had a comp-sales increase of 5.8%. Online sales rose 20%, accounting for 30% of total quarterly sales.
Nordstrom forecast net sales between $15.5 billion and $15.6 billion for the year, compared with a previous forecast of sales between $15.4 billion to $15.5 billion. Analysts expected revenue of $15.91 billion for the year. It forecast adjusted EPS between $3.55 to $3.65, from previous company expectations of $3.50 a share to $3.65 a share. Analyst expectations were for $3.61.