Luxury retailer Nordstrom Inc. said Thursday its profit fell 24 percent in the first quarter, as recession rumblings in the U.S. crimped even wealthier consumers' shopping habits.
But the company's earnings still topped Wall Street's expectations, sending shares up in after-hours trading.
Nordstrom's net profit fell to $119 million, or 54 cents per share, from $157 million, or 60 cents per share in the same three months last year.
Revenue slipped 4 percent to $1.88 billion from $1.95 billion a year ago.
Analysts had predicted Nordstrom would earn a slightly lower profit of 49 cents per share on slightly higher sales of $1.9 billion, according to a Thomson Financial survey.
"The environment we find ourselves in continues to be challenging," said Blake Nordstrom, the retailer's president, during a conference call with analysts Thursday afternoon.
The company said same-store sales, a key retail metric that measures sales at stores open for more than a year, fell 6.5 percent for the quarter, below the expected 3 percent to 5 percent drop.
Michael Koppel, Nordstrom's chief financial officer, said that part way through the quarter, the company realized it would miss sales targets. To make up for it, Nordstrom cut or delayed certain technology and marketing expenses and improved overall efficiency, Koppel said.
While merchandise margins were lower due to merchandise markdowns, some categories did better than average in the quarter, including cosmetics, designer items, women's activewear and intimate apparel. And while women's clothing has been "challenging," high-end blue jeans have "held up well," according to Peter Nordstrom, president of merchandising.
The retailer's credit card business reported rising delinquencies, but Koppel said the increase is consistent with the company's expectations and did not materially affect the bottom line.
"Obviously it's a tough environment," said McAdams Wright Ragen analyst Dan Geiman. "The question today that the company answered was, how are they performing in a tough environment? The answer is, pretty well, all things considered."
Geiman said Nordstrom's recent investments in technology for planning and tracking inventory is helping the company keep costs down now.
For the current second quarter, Nordstrom forecast a profit of 65 cents to 70 cents per share. The midpoint of that range is less than Wall Street's current view for 69 cents per share.
Nordstrom cut its earnings outlook for the full year to $2.65 to $2.89 per share, from an earlier forecast for $2.75 to $2.90 per share. Analysts are currently looking for $2.76 per share.
The retailer said it expects same-store sales to fall 5 percent to 7 percent in the quarter, and 4 percent to 6 percent in the year, a steeper drop than previously expected.
Nordstrom opened four new stores in the first three months of the year. Koppel said the company had no plans to slow new store openings or curtail renovations in existing stores.
Shares of Nordstrom gained 97 cents, or 2.6 percent, to $38.26 in after-hours trading, after gaining $1.15, or 3.2 percent, to $37.29 in regular trading Thursday.
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