Nordstrom 4Q profit drops on discounts

SEATTLE — Nordstrom’s markdowns during the holiday shopping season and costs to grow its Nordstrom Rack chain weighed on its profit during its holiday quarter.The high-end retailer’s earnings outlook for this year was also short of Wall Street predictions. The Seattle-based chain said that expenses from its plans to open stores in Canada, grow its Nordstrom Rack chain and its technology investments would weigh on profit growth.

For the three months through Feb. 1, net income slipped nearly 6 percent, to $268 million, or $1.37 per share, from $284 million, or $1.40 per share, in its fiscal fourth quarter the year before. Its revenue rose less than 1 percent, to $3.71 billion.

Nordstrom’s profit exceeded market forecasts of $1.34 per share, but revenue fell short of the $3.73 billion analysts polled by FactSet anticipated.

Slow spending over the holidays has hurt many retailers. Nordstrom was the latest to say that it increased markdowns because of the increased promotions this November and December. It is also expanding its lower-cost Nordstrom Rack chain. Costs from that effort weighed on profitability.

Nordstrom’s revenue from its websites, catalogs and stores open at least a year increased 2.2 percent, versus a gain of 6.1 percent in the prior year. That’s a key retail measure as it strips away the impact from new and closed stores, which can skew trends. The metric rose 3.6 percent at Nordstrom Rack.

For this year, Nordstrom forecast a profit of $3.75 to $3.90 per share; analysts were anticipating $4.07 per share. It anticipated that revenue will increase 5.5 to 7.5 percent, suggesting sales of $13.2 billion to $13.5 billion. Analysts predicted $13.5 billion.

For the current quarter, the retailer expected profit of 60 to 70 cents per share, below analysts’ estimate of 78 cents per share.

Shares of Nordstrom fell 49 cents to $58.95 in after-hours trading. The stock has gained 7.8 percent over the past 12 months.