Nordstrom (JWN) reported better-than-expected second-quarter profit and raised its full-year outlook late Thursday, citing strong demand at its discount Rack stores and prompting the retailer to focus on opening more over the next four years.
The Seattle-based upscale department store reported net earnings of $156 million, or 75 cents a share, compared with a year-earlier $175 million, or 80 cents, beating average analyst estimates in a Thomson Reuters poll by a penny.
Shares of Nordstrom climbed about 1.7% after hours to $56.
Revenue for the three months ended July 28 was up 7.4% to $2.92 billion from $2.72 billion a year ago, missing the Street’s view of $3.02 billion.
Same-store sales – a key growth metric for retailers – grew by 4.5% during the quarter, led by handbags, women’s shoes and cosmetics, while those at its full-service department stores were up 1.1%.
At Nordstrom Rack, sales climbed by 7.7% during the quarter, prompting the retailer to say it would ramp up the pace of opening discount stores. It currently expects to have 230 Rack stores by the end of 2016, up from 110 now.
“Given the strong performance of the Nordstrom Rack business and availability of quality locations, the company is planning to further accelerate the expansion of this business,” Nordstrom said in a statement.
The retailer lifted its fiscal 2012 earnings outlook to a range of $3.40 to $3.50 a share, up from an earlier view of $3.30 to $3.45, bracketing the Street’s view of $3.45.
Nordstrom sees same-store sales up between 6% and 7%, up from its earlier forecast of 4% to 6%.