Nordstrom tops Wall Street’s earnings expectations, as shoppers buy more clothes and shoes

Northstream on Tuesday delivered a slightly rosier sales forecast, after sales grew about 4% year-over-year as consumers bought clothing, shoes and sportswear at both the company's namesake department store and the discount chain.

The Seattle-based retailer now expects full-year revenue, including retail sales and credit card revenue, to range from flat to 1%. This is comparable to the previous bandwidth of a decline of 1% to a growth of 1%. However, the company stuck to its adjusted earnings outlook for the year of between $1.75 and $2.05 per share.

In a press release, CEO Erik Nordstorm said the company's results show that efforts to target selective shoppers are paying off. Sales of women's clothing and sportswear increased by double digits year after year. Footwear, men's clothing and children's clothing grew by mid-to-high single digits year over year.

Compared to the second quarter, sales of women's clothing, footwear and men's clothing also grew sequentially in the fiscal third quarter.

“Our customers have many choices, and our results give us encouragement that we are on the right track,” he said. “Looking ahead, we will continue to improve our shopping experience as we look to maintain the positive momentum we have been working toward all year.”

Here's how Nordstrom fared in the three-month period ending Nov. 2, compared to what Wall Street expected, based on a survey of analysts by LSEG:

• Earnings per share: Adjusted to 33 cents, it was not immediately clear whether this was comparable to analyst estimates
• Gain: $3.46 billion versus $3.35 billion expected

Nordstrom's net income for the fiscal third quarter was $46 million, or 27 cents per share, compared with $67 million, or 41 cents per share, in the same period a year ago. Revenue rose from $3.32 billion in the same quarter last year.

After excluding a charge related to accelerated technology depreciation, Nordstrom reported adjusted earnings per share of 33 cents.

Comparable sales rose 4% for Nordstrom's two brands, its namesake and discount chain Nordstrom Rack. That easily exceeded analyst expectations for a 0.7% gain in comparable sales, StreetAccount said.

Nordstrom's sales growth, while modest, is notable at a time when sales of durable goods and the luxury category are under pressure. Retailers including Walmart, Best Buy and Target have reported in the past week that customers remain picky when it comes to buying items that are wants, not needs, and that they have paid more attention to price.

Nordstrom's sales growth also grew, despite a calendar shift with the anniversary sale. In last year's quarter, eight days of the sale fell in the three-month period, but this year only one day fell in the quarter. This had a negative effect on net sales of approximately 1%.

Macy's, which deferred all of its earnings, said third-quarter sales fell 2.4% and comparable sales for company-owned and licensed businesses plus online marketplace fell 1.3%.

Nordstrom has leaned on its discount chain Nordstrom Rack to drive both sales growth and new store locations. Still, the two banners reported similar comparable sales in the third quarter, with the namesake store up 4% and Nordstrom Rack up 3.9%.

Nordstrom's latest quarterly update comes about two months after Nordstrom's founding family made a new offer to take the company private. According to a September filing, CEO Erik Nordstrom, President Peter Nordstrom and Mexican retailer El Puerto de Liverpool sent a non-binding letter to form an entity that would buy the chain for $23 per share.

The company's shares have soared since a Reuters report in March that Nordstrom's founding family wanted to take the company private. As of Tuesday's close, the company's shares are up 32% so far this year, besting the S&P 500's 26% gain.

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