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Net income falls on tanking sales

November 14, 2008|Times Wire Services

Upscale department store chain Nordstrom Inc. said its third-quarter profit fell 57% as same-store sales flagged, and the company slashed its full-year outlook.

For the three months that ended Nov. 1, Nordstrom earned $71 million, or 33 cents a share, compared with a profit of $166 million, or 68 cents, a year earlier. Sales fell 8% to $1.81 billion.

The company said the quarter included two one-time items that boosted earnings by 3 cents a share, while the year-ago quarter's results saw a gain of $20.9 million, or 9 cents a share.

Stripping out the one-time items, the company earned 30 cents a share in the latest quarter.

Analysts surveyed by Thomson Reuters expected Nordstrom to earn 31 cents a share on revenue of $1.82 billion. Those estimates typically exclude one-time items.

Seattle-based Nordstrom, which operates about 170 stores in more than two dozen states, said its same-store sales sank 11.1% during the quarter.

Same-store sales, or sales at stores open at least a year, are a key measure of retailer performance because they measure growth at existing stores rather than from newly opened ones.

Same-store sales in the chain's discount Nordstrom Rack sites rose 3.6%.

Nordstrom also cut its full-year guidance to a range of $1.87 to $1.97, down from a projection of $2.55 to $2.65 in August. The company also said sales at stores open at least a year would drop 9% to 10%, more than the 4% to 6% decrease it predicted in August.

"The forecast cut is shocking," said Patricia Edwards, founder of Storehouse Partners and an analyst who has covered retailers for nine years. "It is the biggest hack and slash I have seen from any retailer this quarter."

Nordstrom shares fell 72 cents, or 5.6%, on the news, to $12.24 in after-hours trading, having closed the regular session at $12.96.

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