Nordstrom's stock shot up after the company released a mixed earnings report that had weaker sales but exceeded Wall Street earnings estimates.
The stock rose 13% in extended trading. The shares rose after the news first by more than 21%.
Refinitiv estimates that the company developed as follows compared to Wall Street expectations:
- Adjusted earnings per share: 90 cents vs. 75 cents, estimated
- Sales: $ 3.87 billion compared to $ 3.93 Estimated Billions
"We have achieved a strong bottom line that demonstrates our inventory and cost discipline, and we have completed the quarter in a favorable inventory position and achieved significant productivity gains," said Erik Nordstrom, Co President of Nordstrom.
] Traditionally, investors are responding well to the strong inventory discipline that Nordstrom has identified as the main driver of the earnings jump for the quarter. The company announced that inventories fell 6.5% last year. This was the second straight quarter in which the difference between inventory and sales was positive. By comparison, Macy's last week's earnings report for the second quarter said it was using strong haircuts and discounts to clean up inventories, as equities rose 1
The company has cut its revenue guidance for the fiscal year and earnings forecast. For the year as a whole, a decline in sales of around 2% is forecast. Previously, sales had dropped to a flat 2%. Earnings per share (EPS) also fell slightly to $ 3.25 to $ 3.50, compared to the previous $ 3.25 to $ 3.65.
Net income, unadjusted, fell nearly 13% to $ 141 million, or 90 cents a share, compared to $ 162 million or 95 cents per share a year ago.
Nordstrom also said that its digital revenue, which accounts for 30% of the business, increased 7%. In the same quarter last year, digital revenue accounted for 28% of total revenue.
The company is one of a large number of department stores that are struggling to increase sales. The annual turnover of US department stores fell by 20% between 2017 and 2018 and is expected to fall further this year, according to the US Census Bureau. Nordstrom's inventory fell 57% last year, valuing the company at $ 4 billion.
Tariffs on Chinese clothing and accessories also rise above Nordstrom as retailers across the board are working to keep costs down for the consumer.
Nordstrom's first women's department store opens in New York City on October 24. It is the largest single project investment in the company's history. It opened in April 2018, a men's business and previously operated only a handful of cheap Nordstrom racks in the city.