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Nordstrom not immune from penny pinching

The upscale retailer reports an 8.6% drop in fourth-quarter profit and issues a subdued forecast for 2008.

February 26, 2008|From the Associated Press

SEATTLE — Nordstrom Inc. said Monday its profit fell 8.6% in the fourth quarter as even its high-income core customers pared back on holiday shopping.

The Seattle-based luxury retailer beat Wall Street estimates but warned that it expects 2008 to be another challenging year as it strives to overcome lackluster sales of women's apparel amid weak consumer spending.

For the quarter ended Feb. 2, Nordstrom earned $212 million, or 92 cents a share, down from $232 million, or 89 cents, a year earlier. Analysts surveyed by Thomson Financial were expecting 88 cents a share, on average.

Quarterly sales slipped 4.4% to $2.51 billion, in line with Wall Street estimates and down from $2.63 billion last year.

Excluding one extra week in the fourth quarter of 2006, Nordstrom said sales were essentially flat.

Sales at stores open at least a year, a key measure of a retailer's health, declined 0.7%.

Nordstrom released results after markets closed. The company's shares rose 98 cents, or 2.7%, to close at $36.98 on Monday, then gained another 21 cents in after-hours trading.

Nordstrom said it expected first-quarter earnings of 49 cents to 54 cents a share, below the 59 cents analysts had been expecting. The company said it expected same-store sales in 2008 to range from flat to a 2% decrease, and full-year earnings to range from $2.75 to $2.90 a share, compared with the $2.98 Wall Street was expecting.

"Although the near-term market may be slower and uncertain, we continue to see high-return investment opportunities," Chief Financial Officer Mike Koppel said.

The company expects weak growth in the first half of the year and improving results in the second half, Koppel said.

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