The expansion of Nordstrom

Nordstrom Inc., the largest U.S. luxury department-store chain, posted fourth-quarter profit that trailed analysts’ estimates as the company’s off-price offerings were more appealing than its full-line stores. Net income fell 4.9 percent to $255 million, or $1.32 a share, for the period ended Jan. 31, from $268 million, or $1.37, a year earlier, the company said Thursday in a statement. The average of estimates compiled by Bloomberg was $1.35. Sales at full-line stores open at least a year rose 0.5 percent last quarter, trailing expectations. Sales at the off-price Nordstrom Rack chain grew 3.2 percent, topping projections.

“The full-line stores looked weaker, and you certainly need and want their full-line stores to be running at a good pace”, Tony Scherrer, the director of research at Smead Capital Management in Seattle, said in an interview. “We continue to be in an environment that is a little more so favoring the average price point of the Rack”.

President Blake Nordstrom has been working to capture more bargain hunters with its Rack stores, which drew customers last quarter with its cheaper prices and slimmer margins. The Seattle-based retailer also is looking to expand the department-store chain’s customer base with Trunk Club, a men’s online clothing service, and the flash-sale site Haute Look.

Profit per share in the year through January 2016 will be $3.65 to $3.80, the company said. The average of 30 analysts’ estimates compiled by Bloomberg was $4.12. Nordstrom fell 2.1 percent to $75.50 at 5:09 p.m. in late trading after the results were released. The shares had slid 2.8 percent this year through the New York close.

The retailer is boosting its capital expenditures in the next fiscal year to $1.2 billion from $751 million last year as it opens more Rack locations, expands into Canada and Manhattan and opens a third fulfillment center. Sales on the Nordstrom.com website grew 19 percent over last year, while NordstromRack.com sales increased 28 percent, according to the statement.