Nordstrom's shares rose sharply after the company released a mixed earnings report showing weaker sales but which quite well beat Wall Street estimates.
The stock increased by about 13% in expanded trading. The shares were originally up more than 21% after the news.
Here's how it did, compared to what Wall Street expected, according to Refinitive Consensus Estimates:
- Adjusted earnings per share: 90 cents, versus 75 cents estimated
- Revenue: $ 3.87 billion, versus $ 3, Estimated $ 93 billion
"We delivered strong bottom line results and demonstrated the storage and spending discipline. We left the quarter in a favorable storage position and made important advances in productivity," said Erik Nordstrom, co-president of Nordstrom. [1
Sales at full-price department stores fell 6.5% during the quarter ended August 3, compared with a 5% drop last year. Net sales at its price outside Nordstrom Racks fell 1.9%, a sharp decline from a 7% increase in the same period last year.
The company reduced their net sales guidance for the financial year and revenue guidance. It is forecast that net sales for the year will fall by about 2%. The previously estimated sales will be flat to 2% down. It also lowered the earnings per share policy to a range of $ 3.25 to $ 3.50, compared to the prior guidance of between $ 3.25 to $ 3.65.
On an unadjusted basis, net income fell by nearly 13% to $ 141 million, or $ 0.90 a share, compared with $ 162 million or $ 0.95 a share the year before.
Nordstrom also said that digital sales, representing 30% of the business, grew by 7%. In the same quarter last year, digital sales accounted for 28% of total sales.
The company is among a number of department stores struggling to increase sales. Annual sales in US department stores have fallen 20% from 2017 to 2018, and are on pace to fall more this year, according to U.S. Census Bureau. Nordstrom's share has fallen 57% over the past year, valuing the company at $ 4 billion.
Customs on Chinese clothing and accessories also suffocate over Nordstrom, as retailers across the board work to keep costs low for the consumer.
Nordstrom's first women's store opens in New York on October 24. It marks the largest investment in a single project in the company's history. It also opened a men's store in April 2018 and previously operated only a small handful of Nordstrom racks in price.