Nordstrom beats view, lowers 2008 earnings range

LOS ANGELES (Reuters) - Upscale department store Nordstrom Inc (JWN.N: Quote, Profile, Research, Stock Buzz) reported a lower quarterly net profit on Thursday that beat Wall Street estimates, hurt by lower sales in what the company called a "challenging retail environment."

The company lowered its fiscal 2008 earnings range and said it would cut operating expenses to lessen the impact of lower sales.

First-quarter net profit was $119 million, or 54 cents a share, compared with $157 million, or 60 cents a share, a year earlier.

Analysts, on average, had been expecting earnings of 48 cents per share, according to Reuters Estimates.

As previously announced, first-quarter sales fell nearly 4 percent to $1.88 billion, while sales at stores open at least a year, a key gauge of retail performance, fell 6.5 percent.

Gross margins fell in the quarter, due to more markdowns on cleared inventory, the company said.

In recent months, Seattle-based Nordstrom has noted weakness in the women's apparel category and in California, which accounts for nearly one-third of its sales. The retailer has posted declines in same-store sales for the past five months.

U.S retailers have been feeling the pinch of the weakening economy. Shoppers' ability to spend is being squeezed by high gas prices, rising food costs, a deteriorating housing market, a credit crunch and weakening job market.

Whereas those who sell luxury goods are considered more insulated from economic downturns as their higher-income shoppers have more disposable income, retailers such as Saks Inc (SKS.N: Quote, Profile, Research, Stock Buzz) and Neiman Marcus have noted softer sales in recent months.