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Nordstrom pops 11 percent as earnings top Wall Street's forecast

Nordstrom joined the department store rally Thursday, solidifying the feeling that less bad is good enough for investors when it comes to this group of retailers.

The Seattle-based company's shares shot 11 percent higher in after-hours trading, extending the 7 percent gain it logged earlier in the day. That bounce was led by better-than-expected results from competitors Macy's and Kohl's.

Nordstrom said it earned 67 cents a share in the fiscal second quarter, better than a Thomson Reuters estimate that predicted earnings of 56 cents a share. The company's revenue fell just shy of expectations, coming in at $3.65 billion compared with the consensus estimate of $3.68 billion.

Though the company's same-store sales dropped 1.2 percent, that beat a FactSet forecast of a 3.1 percent decline.

In the prior-year period, Nordstrom earned 93 cents a share on $3.7 billion in revenue.

"Over the past several quarters, our team has been actively addressing our inventory, expense and capital, and in the second quarter, made substantial progress by bringing down inventory in-line with sales," said Blake Nordstrom, co-president.

"Those efforts, along with the strength of our anniversary sale and a great response from customers to that event, drove better than expected results for the second quarter."

Comparable revenues at the company's off-price Rack brand rose 5.3 percent. Same-store sales at its traditional locations fell 2.3 percent. But a shift in timing for its anniversary sale will move some of the event's revenues into the third quarter. Without that shift, the company's comparable sales would have been up 1.3 percent.

Nordstrom said the annual event beat plans and reached an all-time high for sales volume. Lean inventories likewise helped the company reduce the amount of markdowns it offered. The company exited the quarter in "one of the best inventory positions" it's had in many years, management said.

In wake of the earnings beat, Nordstrom raised its forecast for fiscal year 2016. It now expects to report adjusted earnings in the range of $2.60 to $2.75 a share. Previously, the company expected earnings per share in the range of $2.50 to $2.70 a share.

The company reiterated its expectation that sales this year will rise between 2.5 percent and 4.5 percent.