Nordstom cuts 2011 EPS on HauteLook acquisition

Markets Reuters

LOS ANGELES (Reuters) - Upscale retailer Nordstrom Inc <JWN.N> cut its full-year earnings forecast due to the dilutive effect of its HauteLook acquisition, sending shares down 1.7 percent.

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Nordstrom, which has been Wall Street's darling for investing in technologies to enhance customer loyalty programs and draw shoppers years before many rivals did, bought online private sale marketplace HauteLook during the first quarter for $180 million in Nordstrom stock.

The department store operator's new 2011 forecast calls for earnings of $2.80 to $2.95 per share, down from $2.95 to $3.10 per share previously.

Nordstrom said it expected the impact of purchase accounting charges related to its HauteLook acquisition to reduce 2011 earnings by about 20 cents per share, including a 4-cent hit from the first quarter.

It also repeated its prior call for sales at stores open at least one year to rise 2 to 4 percent in 2011.

"The company is heavier on operating expenses than one would normally think, and I don't think the Street factored that in," Wall Street Strategies analyst Brian Sozzi said.

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Analysts, on average, had been targeting a 2011 profit of $3.13 per share, according to Thomson Reuters I/B/E/S.

Nordstrom's first-quarter net income rose 24 percent to $145 million, or 65 cents per share.

Net sales were up 12 percent to $2.23 billion in the first quarter.

First-quarter sales at Nordstrom stores open at least one year increased 7.8 percent, helped by designer, jewelry and men's apparel. At Nordstrom Rack, which accounted for $76 million of the company's net sales, same-store sales were up 1.2 percent.

Gross profit, as a percentage of net sales, increased about 30 basis points from the year-earlier.

Nordstrom's credit segment also continued to improve. Customer payment rates increased, resulting in improved delinquency and write-off trends, and a corresponding decrease in finance charge revenue.

Nordstrom operates 115 department stores, 86 Nordstrom Rack outlet stores, and two Jeffrey boutiques.

The retailer won many shoppers from higher-end chains such as Saks <SKS.N> and Neiman Marcus <NMRCUS.UL> during the recession and has held on to them even as its push for more off-price outlets has allowed it to win bargain-hunters.

Shares closed at $49.17 and were down 1.7 percent at $48.33 in extended trading.

(Reporting by Phil Wahba and Lisa Baertlein; Editing by Steve Orlofsky and Matthew Lewis)

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