Retail

Nordstrom Overcharges Credit Card Customers, Hurts 3Q Results

Nordstrom’s stock was under pressure Thursday (November 15) after the department store operator posted third-quarter results that missed its projections and disclosed it overcharged some of its credit card customers.

According to a report in CNBC, for its third quarter, Nordstrom wrote down $72 million in credit card refunds that went to customers who were charged a higher interest rate by accident.

The charges result in net income coming in 42 percent lower at $67 million or $0.39 a share. That compares with $114 million or $0.67 a share in the year-earlier third quarter.  Nordstrom said it is making moves to prevent overcharges, noting a change in internal settings back in 2010 resulted in customers getting charged higher interest rates on their store credit cards that were delinquent.

“We sincerely apologize to these cardholders. We realize customers and shareholders place a great deal of trust in us, and that’s a responsibility we take seriously,” Nordstrom said on a conference call with analysts covered by CNBC.

The company said that under 4 percent of cardholders will get a refund, with the majority getting under $100. CNBC noted that — excluding the charge — Nordstrom would have surpassed past Wall Streets views, which stood at earnings of $0.66 a share. The news sent shares of Nordstrom down around 11 percent in after-hours trading Thursday, noted CNBC.

During the third quarter, Nordstrom reported revenue of $3.75 billion, which was 3 percent higher than last year’s third quarter. According to CNBC, Wall Street was looking for revenue of $3.69 billion. As for sales at stores that have been open for at least a year, Nordstrom said sales were 2.3 percent higher, which also surpasses Wall Street views which stood at up 2.2 percent, reported CNBC. Earlier this week Nordstrom disclosed it suffered a data breach that exposed employee names, Social Security numbers, dates of birth, checking account and routing numbers, salaries and more. According to The Seattle Times, a company spokesperson confirmed that employees received an email notification and apology from co-president Blake Nordstrom last week regarding the breach.

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