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Nordstrom (JWN) is up 15% after reporting mixed second quarter results and lowering guidance for the year.

The high-end department store missed sales expectations for the fourth consecutive quarter. Net sales fell 5% yr/yr; Full-price segment sales fell 6.5% while Off-Price segment sales fell 1.9%. Growth of 4% in the digital channel was quite weak vs. 23% growth in the second quarter of last year.

The company cited a challenging start to the quarter as well as softer performance for the Anniversary Sale and Off-Price business. The company saw "positive outcomes" from its loyalty and digital marketing efforts, which were cited as a reason for weakness last quarter.

Earnings fell 5% yr/yr to $0.90, beating estimates by $0.13, resulting from strong inventory discipline as well as significant expense efficiencies. Encouragingly, inventories fell 6.5%, leaving the company in a strong position.

Still, the company lowered its net sales forecast for the year (to a 2% decline from flat to down 2% previously) and lowered the high end of its EPS outlook (to $3.25-3.50 from $3.25-3.65). Earnings estimates were already toward the low end of the prior range.

The stock is trading up despite weak sales and a reduced forecast given the encouraging margin results.

Clearly, expectations were quite low. The stock is leading the retail sector higher this morning, perhaps sentiment on the sector bottomed out near term. The stock trades at a historically low ~9x EPS estimates, reflecting the company's poor performance and challenging outlook as mall-based retailers continue to struggle with reduced traffic.

The potential for the Nordstrom family to increase its stake in the company may also be providing some support for the stock.