(By Balaseshan) Fashion specialty retailer Nordstrom Inc. (NYSE:JWN) reported a 10.9% decline in quarterly earnings due to shift in timing of the Anniversary Sale event as well as higher costs and expenses. Earnings exceeded Street's expectations, while revenue missed consensus.
Earnings were $156 million or $0.75 per share for the second quarter, down from $175 million or $0.80 per share last year.
Revenue increased 6.1% to $3.01 billion, on top-performing merchandise categories including Handbags, Women's Shoes and Cosmetics. Same-store sales rose 4.5% for the second quarter.
Analysts, on average, polled by Thomson Reuters had expected a profit of $0.74 per share on revenue of $3.02 billion.
Sales grew 7.4% to $2.92 billion, while credit card revenue declined 3.2% to $91 million.
The Anniversary Sale is historically the company's largest sale of the year and started one week later in July relative to last year. The company expected the event shift to cause an unfavorable comparison in the second quarter, offset by a favorable impact in the third quarter.
Annualized net write-offs were 4.8% of average credit card receivables, down from 7.2% last year. Delinquencies as a percentage of credit card receivables at the end of the second quarter were 1.9%, down from 2.7% at the end of the second quarter of 2011.
Gross margin decreased 98 basis points, due primarily to a combination of the Anniversary Sale shift, enhancements made to the Fashion Rewards program and a reduction in shipping revenue from the launch of free shipping and free returns online that was introduced in the third quarter of 2011.
Return on invested capital (ROIC) for the 12 months ended July 28, 2012, was 12.7%, down from 13.8% achieved in the prior 12-month period.
Looking ahead into the fiscal 2012, the company raised its 2012 earnings guidance, excluding the impact of any future share repurchases, to range of $3.40 to $3.50 per share from previous forecast of $3.30 to $3.45 per share, while Street analysts predict $3.45 per share. Nordstrom now expects same-store sales growth of 6% to 7%.
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. Its initial plan for 15 store openings in 2012 remains and will increase to 24 openings in 2013. The company plans to have over 230 Rack stores by the end of 2016.
JWN closed Thursday's regular session down 0.67% at $55.08. The stock has been trading between $37.28 and $57.75 for the past 52 weeks.