Nordstrom Inc. said Tuesday that second-quarter profit rose 39% on sales of women's apparel and accessories. The company raised its annual profit forecast.
Net income increased to $148.9 million, or 53 cents a share, from $106.9 million, or 37 cents, a year earlier. Sales in the quarter ended July 30 rose 7.8% to $2.1 billion, Seattle-based Nordstrom said. Profit exceeded analysts' estimates by 5 cents.
Increased sales of cosmetics, handbags and designer women's apparel helped extend more than two years of gains at stores open at least a year. President Blake Nordstrom has improved margins by upgrading inventory systems that track merchandise.
"What's driving it is having absolutely the right merchandise, the right number and selection, helped by the inventory systems," said Patricia Edwards, a money manager at Wentworth, Hauser & Violich in Seattle, which owns 625,000 Nordstrom shares.
Nordstrom may look to acquire stores being shed by Federated Department Stores Inc., Blake Nordstrom said. Federated said in July that it would sell 68 stores after its purchase of May Department Stores Co.
Nordstrom raised its 2005 profit estimate to a range of $1.80 to $1.90 a share from the forecast of as much as $1.75 that it gave in May.
Shares of Nordstrom, which reported earnings after the close of regular U.S. trading, fell $1.48, or 4.5%, to $31.12. They've risen 33% this year.
Same-store sales, a key measure of retail health, rose 6.2% in the quarter, helped by demand for $200 handbags, sparkling jewelry and destroyed premium denim, Edwards said.
"They are getting a lot of flow of new merchandise in the stores, a lot of freshness that customers are responding to," she said. "They are able to sell stuff four and five times the price. People are still buying it because it is just that much more hip."