On Thursday morning, top U.S. department store chain Macy's (NYSE:M) reported a steep earnings-per-share decline for the first quarter, missing analysts' estimates by a wide margin.

However, Macy's wasn't the only department store to reveal its first-quarter results on Thursday. Kohl's (NYSE:KSS), Dillard's (NYSE:DDS), and Nordstrom (NYSE:JWN) also released their earnings reports -- and all three beat analysts' EPS expectations.

That didn't matter to investors, though. All four department store stocks were pummeled on Thursday, falling anywhere from 8% (Kohl's) to 18% (Dillard's).

M Price Chart

Department Stores Thursday Stock Performance. Data by YCharts.

Kohl's boosts earnings by keeping costs in check

In the first quarter, sales fell 3.2% year over year at Kohl's, primarily due to a 2.7% decline in comparable-store sales. Nearly all of the sales pressure came in February, perhaps due to delays in the processing of tax refunds. According to Kohl's CEO Kevin Mansell, sales dipped just 1% in the March-April period, compared to an 8% drop in February.

The exterior of a Kohl's store

Cost cuts allowed Kohl's to post strong earnings growth last quarter. Image source: Kohl's.

Despite the sales pressure, Kohl's adjusted EPS surged 26% year over year, reaching $0.39. This easily beat the average analyst estimate of $0.29. Solid cost control was a key driver of the strong earnings performance: Kohl's reduced its operating expenses by about 3% year over year. Gross margin also improved from 35.5% to 36.4% as the company did a better job of managing its inventory.

Investors essentially ignored these cost savings and gross margin improvements at Kohl's, instead focusing on its sales decline, which was greater than expected. As a result, the stock fell about 8% during the day.

Gross margin gains keep Dillard's on track

Like most of its peers, Dillard's reported disappointing revenue results for the first quarter. Total revenue declined 5.6% year over year to $1.45 billion on a 4% comp sales decline, missing the average analyst estimate of $1.47 billion.

On the bright side, gross margin from Dillard's retail operations increased by 65 basis points (0.65 percentage points) year over year. Additionally, Dillard's share buyback program led to a roughly 12% decrease in the company's diluted share count. As a result, EPS fell just 2% year over year to $2.12, ahead of the average analyst estimate of $2.02.

While these results weren't spectacular, they weren't terrible, either. Nevertheless, investors dumped Dillard's stock on Thursday, causing it to plunge nearly 18%.

Nordstrom's profit bounces back

Lastly, Nordstrom reported solid first-quarter earnings results after the market closed on Thursday afternoon. Revenue increased 3.2% despite a 0.8% comp sales slump, because Nordstrom continues to open new stores, particularly for its Nordstrom Rack off-price chain. The total revenue figure was roughly in line with analysts' estimates, although many investors had hoped for stronger comp sales results.

Meanwhile, Nordstrom's adjusted EPS soared 19% to $0.43, far ahead of the average analyst estimate of just $0.27. Higher credit card income was the main driver of this earnings growth.

A rendering of a Nordstrom store

Nordstrom reported modest revenue growth for the first quarter. Image source: Nordstrom.

Nordstrom is by far the best-positioned department store chain today, precisely because of its efforts to diversify away from its full-line mall-based stores. Investors weren't satisfied, though. Nordstrom shares plunged nearly 8% during the day on Thursday -- before the earnings release -- and then fell another 4% after hours.

The best deals at the mall

The 17% sell-off at Macy's on Thursday seems like an overreaction, but at least investors' ire could be explained by Macy's sharp earnings decline. By contrast, while the first-quarter earnings reports from Kohl's, Dillard's, and Nordstrom made it clear that department stores are still under pressure, all three chains posted solid earnings results -- including big EPS increases at Kohl's and Nordstrom.

Thus, Thursday's sell-off could make this a good time to pick up department store stocks at a steep discount. Shares of Kohl's, Dillard's, and Nordstrom are cheap compared to the broader market. Moreover, all three have shown a remarkable ability to keep earnings afloat despite the challenging sales trends affecting the department store industry.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.