Nordstrom Shares Sink After Big Charge on Credit Card Refunds

Nordstrom shares saw a big drop on Thursday in after-hours trading after the department store retailer said that it incorrectly overcharged some of its credit card customers.

The company wrote down $72 million in credit card refunds to customers who were incorrectly charged higher interest rates.

Co-president Blake Nordstrom reassured that Nordstrom is making sure it doesn’t overcharge customers in the future. According to executives, a change in some of its internal settings in 2010 had caused the company to incorrectly charge higher interest rates on store credit cards that were delinquent.

The one-time charge affected net income with it dropping 42 percent to $67 million, or 39 cents a share, during the three months ended Nov. 3. This is compared with $114 million, or 67 cents a share, in the year ago quarter. Revenue jumped 3 percent to $3.75 billion beating expectations of $3.69 billion in sales. Sales at stores open for at least a year were up 2.3 percent overall while analysts expected 2.2 percent.

“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 stated.
Nordstrom estimates that less than 4 percent of its cardholders would be receiving a refund, with most receiving less than $100.

Disclaimer: We have no position in Nordstrom, Inc. (NYSE: JWN) and have not been compensated for this article.