UPDATE 1-Nordstrom sees Q2 earnings below consensus
(adds sales data, CEO quote paras 5-7, adds stock activity)
SEATTLE, July 28 (Reuters) - Upscale retailer Nordstrom Inc. (NYSE: JWN) on Friday said it expects second-quarter earnings to fall well below the Wall Street consensus estimate and it is reassessing its outlook for the remainder of fiscal 2000.
The company expects a shortfall of 12 to 16 cents per share due to disappointing sales, more markdowns than expected, and increased expenses. Nordstrom also said it will recognize an impairment charge estimated at 4 to 5 cents per share related to a 1998 $33 million investment in an Internet grocery business.
Analysts on average expected the Seattle-based retailer to post earnings of 55 cents per share for the quarter ending July 31, according to research firm First Call/Thomson Financial.
"Sales in our recent men's and women's half-yearly clearance events were not as strong as we had anticipated, and sales for the first week of our Anniversary Sale, while modestly better than last year on an event-to-date basis, are below planned levels," Chairman and Chief Executive John Whitacre said in a statement. "We are guardedly optimistic concerning our performance over the second half of this year."
Sales results so far this quarter have been mixed. On July 6, Nordstrom said sales at stores open more than a year rose 9.1 percent in June, aided by its women's half-yearly sale. A month earlier, the retailer said May same-store sales slipped 11 percent, in part due to the women's sale being held entirely in June this year, while last year, 41 stores held four days of the sale during May.
"We will continue to refine our merchandise mix in the women's area, and we must do a better job managing our expenses," Whitacre said in a statement on Friday.
On May 11, when the company reported first quarter results that matched analysts' consensus expectations, Whitacre said it would take "some time" before Nordstrom realized the benefits of improving its mix of women's merchandise and enhancing its store environments, but he was "convinced that we are headed in the right direction."
Nordstrom expects to report second quarter results on Aug. 16.
Shares of Nordstrom closed at 22-3/16 on Thursday, above a 52-week low of 18-1/4 and below a 52-week high of 34-1/2.
(recasts lede, adds analyst comment paras 11-12, background paras 10,13,15; updates shr price para 5, pvs dateline SEATTLE)
By Anna Driver
CHICAGO, July 28 (Reuters) - Upscale retailer Nordstrom Inc. (NYSE: JWN), known for its top-notch customer service, on Friday said it expects second-quarter earnings to fall well below Wall Street estimates as disappointing sales, heavier-than-expected markdowns and higher expenses hit profits.
The Seattle-based company sees a shortfall of 12 to 16 cents per share in its fiscal second quarter, and also said it will recognize an impairment charge estimated at 4 to 5 cents per share related to a 1998 $33 million investment in an Internet grocery business.
Nordstrom also said it is reassessing its outlook for the remainder of fiscal 2000.
Analysts on average expected the Seattle-based retailer to post earnings of 55 cents per share for the quarter ending July 31, according to research firm First Call/Thomson Financial.
Shares of Nordstrom were off 22 percent, down 4-15/16 at 17-1/4 on the New York Stock Exchange after a delayed opening.
"Sales in our recent men's and women's half-yearly clearance events were not as strong as we had anticipated, and sales for the first week of our Anniversary Sale, while modestly better than last year on an event-to-date basis, are below planned levels," Chairman and Chief Executive John Whitacre said in a statement.
"We are guardedly optimistic concerning our performance over the second half of this year. However, there are a number of factors that could affect future results," he added.
Sales results so far this quarter have been mixed. On July 6, Nordstrom said sales at stores open more than a year rose 9.1 percent in June, aided by its women's half-yearly sale. A month earlier, the retailer said May same-store sales slipped 11 percent, in part due to the women's sale being held entirely in June this year, while last year, 41 stores held four days of the sale during May.
"We will continue to refine our merchandise mix in the women's area, and we must do a better job managing our expenses," Whitacre said in a statement on Friday.
In February, Nordstrom said it reorganized its woman's apparel unit to include more modern and causal clothing. The retailer also remodeled its women's departments and added new technology to its supply chain to improve merchandise delivery from vendors.
A Wall Street analyst noted that many retailers saw sales fall off in July, but Nordstrom's problems were worsened by the changes it made.
"Obviously they had a very bad July," Jeffrey Edelman, retail industry analyst with Paine Webber, said. "A lot of the (retail) companies have been giving early warnings, but it's an industry problem that's been compounded by Nordstrom's transitioning."
Earlier this week discounter Kmart Corp. (NYSE: KM) said it would close 3 percent of its stores and launch national clearance sales that will result in worse-than-expected results for the balance of the year.
On May 11, when Nordstrom reported first quarter results that matched analysts' consensus expectations, Whitacre said it would take "some time" before Nordstrom realized the benefits of improving its mix of women's merchandise and enhancing its store environments, but he was "convinced that we are headed in the right direction."
Nordstrom, which operates 109 stores in 23 states, expects to report second quarter results on Aug. 16.
(updates share price in para 5, adds investment rating downgrades in para 13)
By Anna Driver
CHICAGO, July 28 (Reuters) - Upscale retailer Nordstrom Inc. (NYSE: JWN) on Friday said it expects second-quarter earnings to fall well below Wall Street estimates as disappointing sales and heavier-than-expected markdowns and expenses hit profits.
The Seattle-based company sees a shortfall of 12 to 16 cents per share in its fiscal second quarter operations and also said it will recognize a charge estimated at 4 to 5 cents per share related to a 1998 $33 million investment in an Internet grocery business.
Nordstrom further said it is reassessing its outlook for the remainder of fiscal 2000.
Analysts on average expected the Seattle-based retailer to post earnings of 55 cents per share for the quarter ending July 31, according to research firm First Call/Thomson Financial.
News of the shortfall sent shares of Nordstrom down 23 percent. The stock was off 5-1/16 at 17-1/8 in afternoon trade on the New York Stock Exchange.
"Sales in our recent men's and women's half-yearly clearance events were not as strong as we had anticipated, and sales for the first week of our Anniversary Sale, while modestly better than last year on an event-to-date basis, are below planned levels," Chairman and Chief Executive John Whitacre said in a statement.
"We are guardedly optimistic concerning our performance over the second half of this year. However, there are a number of factors that could affect future results," he added.
Sales results so far this quarter have been mixed. On July 6, Nordstrom said sales at stores open more than a year rose 9.1 percent in June, aided by its women's half-yearly sale. A month earlier, the retailer said May same-store sales slipped 11 percent, in part due to the women's sale being held entirely in June this year, while last year, 41 stores held four days of the sale during May.
"We will continue to refine our merchandise mix in the women's area, and we must do a better job managing our expenses," Whitacre said in a statement on Friday.
In February, Nordstrom said it reorganized its woman's apparel unit to include more modern and causal clothing. The retailer also remodeled its women's departments and added new technology to its supply chain to improve merchandise deliveries from vendors.
One analyst noted that many retailers saw sales fall off in July, but Nordstrom's problems were worsened by the changes it made.
"Obviously they had a very bad July," Jeffrey Edelman, retail industry analyst with Paine Webber, said. "A lot of the (retail) companies have been giving early warnings, but it's an industry problem that's been compounded by Nordstrom's transitioning."
The warning also prompted downgrades on Wall Street. George K. Baum and Co. cut Nordstrom's investment rating to neutral from strong buy, and Banc of America Securities cut the retailer's rating to market perform from buy.
Earlier this week discounter Kmart Corp. (NYSE: KM) said it would close 3 percent of its stores and launch national clearance sales that will result in worse-than-expected results for the balance of the year.
On May 11, when Nordstrom reported first-quarter results that matched analysts' consensus expectations, Whitacre said it would take "some time" before Nordstrom realized the benefits of improving its mix of women's merchandise and enhancing its store environments, but he was "convinced that we are headed in the right direction."
Nordstrom, which operates 109 stores in 23 states, expects to report second-quarter results on Aug. 16. |
