Nordstrom Shares Explode after Reporting Strong Profit in the Second Quarter

Shares of retail company Nordstrom were moving higher on Wednesday after the company reported strong profit in the second quarter, despite sales weakening.

For the quarter, Nordstrom reported adjusted earnings per share of 90 cents while analysts had expected 75 cents. Revenue of $3.87 billion was behind the $3.93 billion that was expected.

Shares jumped roughly 5% in after-hours trading but intially had seen gains of over 21%.

“We delivered strong bottom-line results, demonstrating our inventory and expense discipline. We exited the quarter in a favorable inventory position and made important strides in productivity,” remarked Erik Nordstrom, the co-president of Nordstrom.

For the quarter ended Aug. 3, Nordstrom also reported that inventory was down 6.5% over the last year, marking the second consecutive quarter of positive spread between inventory and sales.

Sales at full-price department stores fell 6.5%, compared with a 5% drop last year. Net sales at its off-price Nordstrom Rack stores fell 1.9%, a steep decline from the 7% rise in the same year-ago period.

Digital sales, which represent 30% of the business, saw a growth of 7%. In the same quarter last year, its digital sales represented only 28% of its total sales.

Looking ahead the company also cut its net sales guidance for the fiscal year and earnings guidance. Now Nordstrom forecasts net sales for the year to decrease by about 2% when previously it estimated sales would be flat to 2% down.

Nordstrom also slightly lowered guidance on earnings per share to a range of $3.25 to $3.50, compared with the prior guidance of between $3.25 to $3.65.

According to the company, it did not factor impeding tariffs into the forecast. Nordstrom did however say that they “will be relatively immaterial for the year.”

The company’s very first department store just for women is anticipated to open on October 24th in New York and is the largest single project in Nordstrom’s history.

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