What happened

Shares of Nordstrom (NYSE:JWN) were sliding today after a one-time credit card charge spoiled an otherwise solid third-quarter earnings report. As a result, the stock was down 13% as of 11:09 a.m. EST.

So what 

The high-end department store chain said comparable sales across both its full-price and discount businesses were up 2.3%, pushing total revenue 3% higher to $3.75 billion, which topped estimates at $3.69 billion. Including a $72 million charge after the company found that some delinquent credit card accounts were being charged at a higher rate than they should have been, the company reported earnings per share of $0.39, down from $0.67 a year ago. Adjusting for that charge, EPS was flat at $0.67, beating expectations by a penny.

The exterior of a Nordstrom Rack store.

Image source: Nordstrom.

Growth was largely driven by the off-price channel, which includes Nordstrom Rack and related e-commerce sites, where comparable sales were up 5.8% in the quarter, while its full-price business saw comps increase just 0.4%, weakening from earlier in the year. Digital sales growth continued to be strong, increasing 20%. 

On the earnings call, Blake Nordstrom said the company was poised for a strong fourth quarter and beyond, saying, "We're well-positioned to improve the customer experience and believe our combination of digital capabilities and local market assets; our people, product, and place, make us uniquely positioned for success in the market."

Now what 

Nordstrom also bumped up its guidance for the full year, making the sell-off all the more puzzling. The retailer now sees comparable sales growth of 2%, up from a prior range of 1.5% to 2%, and revenue of $15.5 billion to $15.6 billion, up from $15.4 billion to $15.5 billion. On the bottom line, the company lifted its adjusted EPS guidance from $3.50-$3.65 to $3.55-$3.65. Management also said it expected "to achieve an inflection point for profitable growth this year excluding the non-recurring charge."

Given the surprising sell-off, the stock now looks more appealing, with growth accelerating and the retailer continuing to benefit from tailwinds from the broader economy.

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.