LOS ANGELES Upscale department store Nordstrom Inc (JWN.N) 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 and Neiman Marcus have noted softer sales in recent months.
Nordstrom now expects fiscal 2008 earnings to range between $2.65 to $2.80 from an earlier range of $2.75 to $2.90.
For the second quarter, Nordstrom expects earnings between 65 cents and 70 cents, based on same-store sales declining between 5 percent and 7 percent, compared with average analyst expectations of 68 cents.
Wall Street, on average, had been expecting fiscal 2008 earnings of $2.77, according to Reuters Estimates.
The company's shares bounced above and below Thursday's closing price after results were announced, moving up about 2 percent to $38.10 after closing at $37.29 on the New York Stock Exchange.
(Reporting by Alexandria Sage; Editing by Andre Grenon)