What happened

Shares of Nordstrom, Inc. (NYSE:JWN) 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.

The exterior of a Nordstrom Rack store

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.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool recommends Nordstrom. The Motley Fool has a disclosure policy.