Nordstrom exceeds expectations with better-than-expected Q2
Nordstrom produced better than expected results for the second quarter of 2016. The company pushed its Anniversary Sale back by one week in comparison to 2015, which helped drive the quarter’s results in addition to efforts made to reduce inventory and address expense and capital.
The company in July expanded Madewell to 20 more stores, which began with 15 locations in March 2015 when it launched, and also announced the opening of retail locations in Dallas, TX and CityPlace in Minnesota. In June, Nordstrom closed its Horton Plaza store in San Diego and closed a Trunk Club fulfillment center in Chicago, which will be integrated with Nordstrom's network of fulfillment and distribution centers.
Total company net sales decreased slightly to $3.6 million and total comparable sales decreased 1.2%. Net sales for Nordstrom full-line stores in the US and Canada, Nordstrom.com and Trunk Club decreased 0.4% and Nordstrom Rack stores and HauteLook net sales increased 11.2%.
Net earnings were $117 million and earnings before interest and taxes (EBIT) was $221 million compared to $211 million and $377 million, respectively, in the prior year. Retail EBIT decreased $59 million and Credit EBIT decreased $97 million, which reflected a $64 million benefit from a non-cash accounting adjustment.
Gross profit and SG&A expenses, both as a percentage of net sales, decreased 101 basis points and increased 212 basis points, respectively, and the company repurchased 1.3 million shares of its common stock for $60 million.
Nordstrom maintained its fiscal year 2016 net sales and comparable sales outlook and adjusted its Retail EBIT, Credit EBIT and earnings outlook. The company expects net sales to increase in range of 2.5% and 4.5% and comparable sales to be in range of decreasing 1% and increasing 1%. Retail EBIT is now expected to decrease 10 to 15%, Credit EBIT is expected to be approximately $80 million and the earnings per share is predicted to be in range of $2.60 and $2.75.
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