Nordstrom shares shoot higher on strong sales growth
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Nordstrom shares soared on Thursday after the upscale US department-store chain raised its full-year revenue and earnings outlook following stronger-than-expected quarterly sales growth.
Nordstrom shares were up 12.8 per cent in after-hours trading, signalling Wall Street’s enthusiasm for its latest quarterly earnings.
During the quarter ended August 4, net sales rose 7.1 per cent year-on-year to $3.98bn, while net earnings came in at $162m, versus $110m a year ago. Earnings per diluted share were 95 cents improved on the 65 cents posted in the year-ago period.
Analysts had been looking for net sales of $3.95bn and net earnings of $143.57m, or 84 cents a share, per Thomson Reuters.
Comparable sales — a key industry metric for sales growth — were up 4 per cent year-on -year in the quarter, sailing well past expectations for a 0.8 per cent advance.
The company credited the results to solid performance at both its full-price Nordstrom stores — thanks to strong contributions from kids apparel and beauty categories — and its off-price Nordstrom Rack line. Its digital offerings also continued to gain ground, as it fends off competition from online retailers, with digital sales up 23 per cent from a year ago, representing 34 per cent of overall quarterly sales, a bigger slice than the 29 per cent racked up last year.
Crediting its first-half performance, Nordstrom raised its full-year earnings per share outlook. It is now setting its sights on a range of $3.50 to $3.65, up from its previous forecast for $3.35 to $3.55. It also nudged higher its net sales outlook, forecasting a range of $15.4bn to $15.5bn, up from $15.2bn to $15.4bn previously.
Nordstrom, like other retailers traditionally reliant on brick-and-mortar stores, has been retrenching in recent years in response to shifting shopping habits. Strong consumer spending during 2018, however, has helped to lift earnings for a broad range of retailers, including Walmart, although rival department-store chain Macy’s latest quarterly report left Wall Street underwhelmed despite generally solid numbers.
Earlier this year, its board pulled the plug on discussions with members of its founding family about a potential takeover deal, saying they had not been able to reach an agreement on the right price.
After ending 2017 relatively flat, Nordstrom shares are up more than 10 per cent so far this year.
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