(Bloomberg) -- Nordstrom Inc. reported profit that beat analysts’ estimates, avoiding the challenges that department store peers are grappling with -- at least for now. The stock jumped on the news.
Second-quarter earnings per share were 90 cents, exceeding the average estimate from analysts. Revenue fell 5.1% from a year earlier to $3.78 billion, compared with projections for $3.85 billion.
Nordstrom’s results may offer the industry some hope that the department-store business model can still be viable. Erik Nordstrom, the company’s co-president and chief executive officer, said Nordstrom is “focused on driving our top-line, and while this can take time, we are confident in our ability to manage through cycles.”Still, there are challenges ahead. The company, which had earlier said net sales could be flat this year, is now saying they’ll be down 2%. It also narrowed its earnings range to $3.25 to $3.50 from $3.25 to $3.65 previously.Seattle-based Nordstrom is making a big bet on New York: It will open a flagship store there in October -- a seven-story, 320,000-square-foot behemoth that targets women. It will also open two small format local stores in the city in September. In Los Angeles, where it’s already operating local stores, it has had success increasing customer engagement through services and in-store pick-up, it said.The report may sharpen investors’ focus on whether the founding family still wants to take the company private. The Wall Street Journal reported last month that family members are in talks to increase their stake. The company said it wouldn’t comment on market speculation in its conference call.Nordstrom said it ended the quarter with a favorable inventory position -- an area that has challenged some peers -- with sales “around the low end” of the expected range. “The positive was good inventory control, and that was encouraging,” said Poonam Goyal, an analyst with Bloomberg Intelligence. She said the overall report sent a mixed message because of the less optimistic guidance.
The shares rose as much as 13% in late trading Wednesday. The stock has fallen 43% this year through Wednesday’s close, compared with a 17% gain for the S&P 500.Click here for more financial informationClick here for company statement
(An earlier version corrected the revenue figure and percentage change in first bullet.)
To contact the reporter on this story: Jordyn Holman in New York at email@example.com
To contact the editors responsible for this story: Anne Riley Moffat at firstname.lastname@example.org, Jonathan Roeder, Kevin Miller
For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.