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The Seattle-based retailer mistakenly charged overdue credit card accounts for an excessive interest rate, which had a negative impact of $ 72 million on earnings – 28 cents per share – before interest and taxes.
Nordstrom's quarterly earnings – and its share price – have been disrupted by the disclosure that some credit card customers have been charging too much interest since 2010.
Leaders said Thursday that the multi-year error, in which overdue card accounts were overloaded, had recently been discovered and was being corrected, resulting in a $ 72 million impact on Nordstrom's results in the third quarter.
Chief Financial Officer Anne Bramman said the company was evaluating the impact on each credit card account and preparing to issue refunds or credits. Less than 4 percent of accounts will receive repayments, usually $ 100 or less, she said.
"We do not like it to happen to our customers and we're sorry it happened," she said.
Refunds are part of the non-recurring one-time charges, which eliminated 28 cents per share.
As a result, earnings for the quarter were $ 67 million, or 39 cents per share. Without this charge, the company's earnings would have been slightly higher than the consensus estimate of Wall Street analysts, which was 66 cents per share.
The credit card problem follows last week's disclosure that a security breach would have exposed a wide range of information about current and former employees, including names, social security numbers and data. wage. Nordstrom executives made no mention of this problem during a conference call with financial analysts after the announcement of its results.
The Nordstrom share, down about 3.5% on Thursday, dropped nearly 9% in trading after regular business hours to about $ 53.65 at 19:16. IS.
In the third quarter of the year, total revenue was close to $ 3.75 billion, including $ 100 million in credit cards, an increase of 3.3% over the same quarter of the same period last year. last year.
These sales figures are also complicated by a change in timing in one of the company's most important events – the anniversary sale dropped in the second quarter of this year and the third quarter of last year – and by a new standard for revenue recognition. The company said the review of the second and third quarters together was removing these complications and that sales for the six months were up 5.1% from the comparable six months of 2017.
Comparable sales – a closely monitored measure of retailing at existing sites – increased 2.3% in the third quarter of 13 weeks of Nordstrom's fiscal year ended Nov. 3, compared to the same period last year. corresponding period of 2017. However, chain sales increased 0.4%, while its non-price business, including Nordstrom Rack, grew by 5.8%.
Digital sales remain the most dynamic part of Nordstrom's business – up 20% over the quarter and now account for 30% of the company's total sales in the third quarter. Digital represented less than a quarter of the company's revenue two years ago.
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