Nordstrom Inc., driven by sales growth in the second quarter that beat results from other department store operators, met its earnings expectation of 65 cents per diluted share and raised its outlook for the year.
Net sales are now seen growing 4 percent, compared to the previous forecast of 3 to 4 percent. And earnings per diluted share are now seen reaching $2.85 to $3, as opposed to the previous forecast of $2.75 to $3.
In the quarter ended July 29, total sales increased 3.5 percent to $3.7 billion from $3.6 billion in the year-ago period, and comparable sales increased 1.7 percent.
Nordstrom’s anniversary sale, the retailer’s largest event of the year that runs for two weeks in the summer and reaches a level of transactions rivaling those the retailer sees during the holiday season, performed better than recent trends. Nordstrom proprietary labels represented three of the top five selling brands during the event. However, according to copresident Blake Nordstrom, “Anniversary sales don’t necessarily inform our second-half performance.”
For the anniversary sale, new women’s, men’s and kids’ fall merchandise is stocked just for this event, with buyers receiving orders from vendors when department stores typically don’t get them. Store cardholders get early access to the exclusive, limited supply of fall goods at sale prices for two weeks. Prices go back up after the sale. This year, the anniversary sale ran from July 21 through Aug. 6.
After dropping nearly 5 percent amid a broad market selloff Thursday, investors pushed shares of the company up more than 2 percent in after-hours trading.
Online sales grew 20 percent at nordstrom.com and 27 percent at Nordstromrack.com/HauteLook.
Second-quarter net earnings dropped slightly to $110 million and earnings before interest and taxes were $217 million, or 5.8 percent of net sales, compared with net earnings of $117 million and EBIT of $221 million, or 6.1 percent of net sales, during the same period in fiscal 2016.
Sales at Nordstrom full-line stores, nordstrom.com and Trunk Club, combined, increased 2.4 percent, while comparable sales increased 1.4 percent. The top-performing merchandise categories were women’s apparel and beauty. Activewear was another strong category.
Nordstrom Rack stores and Nordstromrack.com/HauteLook saw net sales grow 9.8 percent and comparable sales increased 3.1 percent.
The East was the top-ranking region last quarter.
In a conference call, the Nordstroms provided color on what was a good quarter for the business, particularly in light of the revenue declines reported by Macy’s, Kohl’s and Dillard’s in the same period.
Regarding initiatives, Nordstrom executives said the company is expanding its “reserve-online, try-on-in-store” service to 50 stores by the end of the year; Nordstrom’s sixth full-line store in Canada opens in September in Sherway Gardens in Toronto; the Manhattan flagship complex on West 57th Street and Broadway is on track with the men’s store seen opening in March and the women’s tower [the main component of the complex] seen opening in fall of 2019. It’s a $500 million project and Nordstrom’s largest ever.
The executives had no comment on efforts to take the company private. On June 8, the company said it formed a group to explore the possibility.