Department store Nordstrom (JWN 44.87) delivered its second quarter results last night, hot on the heels of earnings reports from Macy's (M 20.67) and Kohl's (KSS 39.50) and a 4.3% decline in its stock in the wake of those reports. Shares of JWN are making up a bit of yesterday's lost ground in pre-market action, however, after Nordstrom's own second report and outlook were better than feared.
Both revenue and earnings per share were in-line with analysts' average expectations of $3.7 billion, up 3.5%, and $0.65, down 3%, respectively.
The number that jumped out to most investors, though, was the 1.7% increase in comparable sales. That was better than the 0.4% comparable sales decline for Kohl's and the 2.8% comparable sales decline on an owned basis for Macy's.
Nordstrom was able to separate itself from the wounded department store pack thanks to the success of its Anniversary Sale event, which performed better than recent trends, growth in its online business, and continued gains for its off-price Nordstrom Rack brand.
Comparable sales for the Nordstrom brand, which includes Nordstrom.com, increased 1.4% while comparable sales for the Nordstrom Rack brand jumped 3.1%.
Nordstrom's gross margin rate for the period decreased 25 basis points year-over-year to 34.1% due primarily to higher occupancy expenses tied to new store growth and higher loyalty expenses during the Anniversary Sale. Nordstrom said, however, that improved merchandise margins from continued strength in regular price selling acted as a partial offset.
The retailer's net earnings of $110 million were down 6% from a year ago and its earnings of $0.65 per diluted share slipped 3% even though there fewer diluted shares outstanding used in the computation than last year.
Looking ahead, Nordstrom tweaked its FY17 net sales guidance from 3-4% to approximately 4%. Its comparable sales forecast was left unchanged at approximately flat, and its EPS guidance range was bumped from $2.75-$3.00 to $2.85-$3.00.
The fact that Nordstrom didn't take any of its guidance down for the full year was regarded as a good sign that the worst of its earnings-related problems may be behind it. Still, with the projection that comparable sales will be approximately flat, it is evident that Nordstrom, like other department stores, still faces some challenging headwinds.
Its stock is down 6.4% year-to-date, yet it is up 1.6% ahead of the opening bell.