Nordstrom’s 3Q Profits Rose 6.7 Percent

Net sales rose 14.2 percent to $2.38 billion, from $2.087 billion in the year ago period.

Analysts were expecting earnings per share of 59 cents on net sales of $2.35 billion. Revenue at stores opened at least a year climbed 7.9 percent for the quarter.

THIRD QUARTER SUMMARY

Nordstrom's third quarter performance reflected strong top-line performance across channels. The company's ongoing efforts to enhance the customer experience in stores and online included in late August the addition of free shipping and returns for all online orders. Additionally, the company opened two full-line stores and nine Nordstrom Racks during the quarter.

Nordstrom net sales, which include results from the full-line and Direct businesses, increased $159 million, or 9.8 percent, compared with the same period in fiscal 2010. Same-store sales increased 8.5 percent. Top-performing merchandise categories included Designer, Handbags and Dresses. The South and Midwest regions were the top-performing geographic areas for full-line stores relative to the third quarter of 2010. The Direct channel continued to show strong sales growth, outpacing the overall Nordstrom increase.

Nordstrom Rack net sales increased $101 million, or 23.6 percent, compared with the same period in fiscal 2010, with same-store sales up 6.8 percent.

Gross profit, as a percentage of net sales, increased approximately 40 basis points compared with last year's third quarter. The improvement was driven by the ability to leverage buying and occupancy expenses during the quarter.

Retail selling, general and administrative expenses increased $101 million compared with last year's third quarter. The increase in part was attributable to growth in both existing and new stores. It also reflected various initiatives to grow the e-commerce business, including HauteLook operating and purchase accounting expenses, and improvements in the shopping experience across channels.

The Credit segment continued to demonstrate improving trends in its overall performance, although at a moderating pace. Customer payment rates increased, resulting in improved trends in delinquency and write-off rates, and a corresponding decrease in finance charge revenue. Annualized net write-offs were 5.8 percent of average credit card receivables during the quarter, down from 8.2 percent in the third quarter of 2010. Delinquencies as a percentage of credit card receivables at the end of the third quarter were 2.8 percent, down from 3.5 percent at the end of the third quarter of 2010.