(Reuters) -Nordstrom Inc raised its annual profit and revenue forecasts on Tuesday as the upscale retailer counts on demand from affluent consumers to help it overcome decades-high inflation, sending its shares up 11% in extended trading.
Net sales across Nordstrom’s banner stores exceeded pre-pandemic levels in the first quarter with a 23.5% jump after Americans returning to offices and social events snapped up designer apparel and footwear.
“At this point, we have not seen inflationary cost pressures adversely impact customer spending which we believe is due to the higher income profile and resiliency of our customer base,” Chief Financial Officer Anne Bramman said in a post-earnings call.
Luxury retailer Ralph Lauren has also forecast improved full-year margins.
The confident outlook from Nordstrom and Ralph Lauren was in sharp contrast to peer Kohl’s and big-box retailers Walmart Inc and Target Corp, which have taken a beating as runaway inflation squeezes consumer spending.
In a bid to combat rising costs, Nordstrom hiked prices during the quarter and demand has held strong so far, it said.
Off-price division Nordstrom Rack reported a growth of 10.3%, driven by increased footfall and better stock levels.
Nordstrom, which also authorized a new $500 million buyback, projected fiscal 2022 revenue to rise 6% to 8%, compared with a prior forecast of 5% to 7% growth. Full-year adjusted profit per share is expected between $3.38 and $3.68, higher than $3.15 to $3.50 earlier.
Total revenue rose 18.7% to $3.57 billion in the first quarter, surpassing analysts’ estimates of $3.28 billion, according to Refinitiv IBES.
The retailer reported a loss of 1 cent per share on an adjusted basis, compared with estimates for a loss of 5 cents.
(Reporting by Mehr Bedi in Bengaluru; Editing by Devika Syamnath)