- Prachi Singh |
Nordstrom earnings per diluted share stood at 0.26 dollar and total company net sales increased 2.5 percent for the first quarter ended April 30, 2016. However, comparable sales decreased 1.7 percent, compared with the same period last year. Nordstrom said, first quarter earnings were below the company's expectations, primarily driven by lower than planned sales and higher markdowns to better align inventory to current trends.
“Our first quarter results were impacted by lower than expected sales. In response we have made further adjustments to our inventory and expense plans,” said Blake Nordstrom, Co-President, Nordstrom, adding, “As the pace of change in retail continues to accelerate, we remain committed to serving customers by taking steps that will continue to meet their expectations while driving profitable growth.”
Net earnings decline in the first quarter
First quarter net earnings were 46 million dollars and EBIT were 106 million dollars, or 3.3 percent of net sales, compared with 128 million dollars and EBIT of 245 million dollars, or 7.9 percent of net sales, during the same period in fiscal 2015.
Full-price net sales, which consist of US full-line stores and Nordstrom.com, combined with Canada and Trunk Club, decreased 2.2 percent and comparable sales decreased 4.3 percent. Across US full-line stores and Nordstrom.com, the top-performing merchandise category was beauty. The younger customer-focused departments in women's apparel continued to reflect strength with positive comparable sales increases. The Midwest was the top-performing full-price geographic region.
Off-price net sales, which consist of Nordstrom Rack stores and Nordstromrack.com/HauteLook, increased 11.8 percent and comparable sales increased 4.6 percent. The East was the top-performing off-price geographic region.
Gross profit down, cuts FY16 outlook
Gross profit, as a percentage of net sales, of 34.2 percent decreased 164 basis points compared with the same period in fiscal 2015, primarily due to higher markdowns to better align inventory to current trends. To date in fiscal 2016, the company relocated one full-line store and opened six Nordstrom Rack stores.
For fiscal year 2016, the company expects net sales to improve 2.5 percent to 4.5 percent compared to the prior outlook of 3.5 percent to 5.5 percent increase and comparable sales to decrease 1 percent to increase 1 percent instead on 0 to 2 percent increase expected earlier. Earnings per diluted share are expected to be 2.50 to 2.70 dollars against 3.10 dollars to 3.35 dollars announced in the earlier forecast.