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UPDATE 1-Nordstrom profit beats estimates, shares surge 13%

(Compares with estimates, adds shares, background)

Aug 21 (Reuters) - Upscale retailer Nordstrom Inc reported a better-than-expected quarterly profit on Wednesday, as its focus on online business helped offset weaker sales in its brick-and-mortar stores, sending its shares up 13% in extended trading.

The company has been investing heavily in its online business and loyalty programs to beat back competition from other upscale department stores and e-commerce rivals.

The 118-year old retailer has also improved offerings and worked on its inventory management as part of a turnaround plan to boost profit.

"We exited the quarter in a favorable inventory position and made important strides in productivity," Nordstrom co-President Erik Nordstrom said.

The company said digital sales rose 4% for the second quarter ended Aug. 3, although total revenue fell 5% to $3.87 billion.

Net earnings fell to $141 million, or 90 cents per share, in the quarter from $162 million, or 95 cents per share, a year earlier.

Analysts were expecting Nordstrom to report sales of $3.93 billion and a profit of 75 cents for the quarter, according to IBES data from Refinitiv. (Reporting by Nivedita Balu in Bengaluru; Editing by Anil D'Silva)