(Reuters) - Nordstrom Inc JWN.N raised its 2019 forecast, unlike many competitors, and reported third-quarter profit above Wall Street expectations on Thursday as it sold more off-price clothing and kept inventories in check, sending the retailer's shares up about 8% in extended trading.
The Seattle-based company, which sells everything from apparel and footwear to home decor, said investments in its loyalty program and digital marketing also helped sell more merchandise.
“We’ve been purposeful about improving inventory flow, refining product allocation and emphasizing merchandise that’s seasonally relevant,” said Nordstrom co-President Erik Nordstrom on a call with investors.
Top-performing brands in the quarter included Topshop, Nike Inc NKE.N, Canada Goose, Louis Vuitton and Valentino, he said.
Nordstrom, like other brick-and-mortar retailers, is seeking to lure shoppers to malls and away from big-box budget retailers like Target Corp TGT.N and Walmart Inc WMT.N, or online sellers like Amazon.com Inc AMZN.O.
In a bid to attract new customers and retain existing ones, the retailer has been rolling out concept stores such as “Nordstrom Local,” which holds no stock and serves as pickup points for online orders and returns, while also providing personal styling and tailoring options.
It opened a New York City flagship store last month with a suite of services with cafes, a donut shop, fine-dining restaurants and a full bar at the center of its women’s shoe floor. In June, Nordstrom entered into a partnership with clothing rental firm, Rent the Runway.
For the holidays, Nordstrom is expanding its gift assortment across full-price and off-price, and is offering services like free next-day shipping, 24/7 order pickup and complementary gift wrapping, it said.
Gordon Haskett analyst Chuck Grom applauded Nordstrom for its performance in off-price but noted that its full-line stores continue to experience softness.
“Expect to see a relief rally given how much the stock has been under pressure year-to-date,” Grom said. Nordstrom’s stock is down roughly 30% year-to-date.
The company also raised the lower-end of its full-year profit to $3.30 to $3.50 per share from the prior forecast of $3.25 to $3.50 per share and said the impact of U.S. tariffs would not be significant for the year.
Net sales at its off-price stores rose 1.2% in the third quarter and digital sales climbed about 7%.
Excluding items, the company earned 81 cents per share, beating analysts’ expectation of 64 cents.
Total revenue fell 2% to $3.67 billion in the third quarter ended Nov. 2, in line with the analysts’ average estimate, according to IBES Refinitiv data.
Reporting by Soundarya J in Bengaluru and Melissa Fares in New York; Editing by Arun Koyyur and Lisa Shumaker
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