What happened
Shares of Nordstrom, Inc. (JWN +0.00%) are popping today, up 11.2% as of noon EDT, after the department-store chain turned in an impressive second-quarter earnings report. The high-end retailer showed off strong growth in digital sales and quelled concerns that arose in July when it cut its full-year sales guidance.
So what
Nordstrom executed in all aspects of its business, as comparable sales rose 4%, up 4.1% in its full-price division and 4% in off-price, which includes Nordstrom Rack. Digital sales rose 23% in the quarter and now make up 34% of total revenue, showing the company is ahead of the curve in e-commerce.
Image source: Nordstrom.
Overall revenue in the period increased 7.2% to $4.07 billion, topping estimates of $3.99 billion, and gross margin improved 91 basis points thanks to higher product margins from better full-priced selling trends and operating leverage from the increase in comparable sales.
Due to those numbers and a lower tax rate from tax reform, earnings per share surged from $0.65 to $0.95, well ahead of expectations of $0.84.
Now what
Looking ahead, Nordstrom also signaled that its momentum would continue, raising its guidance for the year. The retailer now sees full-year revenue of $15.4 billion-$15.5 billion, up from a prior range of $15.2 billion-$15.4 billion, and it expects comparable-sales growth of 1.5%-2%, up from a previous forecast of 0.5%-1.5%.
On the bottom line, Nordstrom now expects EPS of $3.50-$3.65, up from the earlier guidance for $3.35-$3.55 in EPS.
With online sales continuing to surge and profitability improving, Nordstrom is showing why it's a best-in-class department store. As long as the economy remains strong, I'd expect this momentum to continue.
