Nordstrom (NYSE:JWN), struggling to revamp sales at full-price stores, on Thursday reported its first quarterly revenue decline in seven years.
Still, results beat expectations, and company executives, bullish with results thus far, raised profit projections for the year.
The Seattle retailer, which affirmed its sales projections, now expects to make $2.60 to $2.75 a share in profit, up from its previous outlook for $2.50 to $2.70 a share.
Shares, which in June set a nearly six-year low, surged 11% to $52.91 in after-hours trading.
Department stores, once the main traffic driver at shopping malls as the catchall destination for various brands, have been hard hit by shifts in consumer behavior�and spending�with online sales picking up at the expense of traditional brick-and-mortar stores.
Macy's Inc (NYSE:M) on Thursday disclosed plans to close about 15% of its full-line stores following another quarter of weak sales. Meanwhile, Kohl's Corp (NYSE:KSS). on Thursday cut its profit targets for the year, following another quarter of weak sales.
J.C. Penney Co. (NYSE:JCP) is scheduled to report second-quarter results on Friday.
Nordstrom, which like many other retailers has turned to discounts to help boost sales and clear inventory, has reported lower profit in the three most recent years. Profit is again expected to decline this year.
Over all, sales for the quarter ended July 30 edged down 0.2% from the year earlier, while comparable sales fell 1.2%, narrower than the 3.1% decline projected by analysts surveyed by FactSet.
Sales at the company's full-price stores, which account for the bulk of sales, fell 2%, with comparable sales at those stores falling 2.8%. Meanwhile, sales at discount stores Nordstrom Rack and HauteLook rose 11%, with comparable sales improving 5.3%.
Nordstrom defines comparable sales, a key performance metric for retailers, as sales at stores open for at least a year and online sales.
The retailer's second-quarter profit narrowed 45% to $117 million, or 67 cents a share. Total revenue, which includes its share from branded credit cards, fell 1.4% to $3.65 billion. Nordstrom sold its credit-card business last year.
Analysts surveyed by Thomson Reuters had projected profit of 56 cents a share on $3.68 billion in revenue.
Inventory rose 1.4%, even as the retailer increased promotions and markdowns. Gross profit margin decreased 101 basis points from the prior-year period to 34.3%.
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