Nordstrom stock jumps on Q4 earnings

Yahoo Finance's Brian Sozzi and Julie Hyman discuss why Nordstrom stock is soaring after the company reported earnings.

Video Transcript

JULIE HYMAN: So, let's move on to another mover that we are watching and that is Nordstrom. Now, Nordstrom shares are leaping, I mean leaping, up by 30% right now. I should mention, I noticed this morning the stock is pretty heavily shorted. About 22% of its float is sold short.

So you could be seeing a short squeeze effect in these shares. I think it's pretty safe to say that's at least part of the phenomenon and why it is such a big increase. But, to be fair, the numbers the company put up were pretty darn good. Sales were up 23% in its fiscal fourth quarter.

That's better than estimated. Earnings per share, better than estimated. And the company is now saying revenue growth this year will be 5%-7%, which is also better than estimated. Nordstrom Rack, by the way, part of the company's strength here, that's of course, its off price chain. And so all of this contributing to the gain that we're seeing in the shares today, Sozz.

BRIAN SOZZI: Yeah, I want to be perfectly clear here, Julie. This quarter from Nordstrom came completely, absolutely, utterly out of nowhere. This is a company that's been struggling for more than a year to get the right inventory in store, get its pricing right, get its expense structure under control here, and I think the Street was very much shocked here to see sales up in the core Nordstrom banner and also the Rack brand.

And, of course, that is scaring, likely scaring out the shorts, as you mentioned, Julie, stock up over 30%. I liked on the earnings call it sounded like a different company, Julie. First, they're getting the inventory correct. Seems like they have found religion on expenses, cutting expenses down, and just running a better operation.

Now, there is one interesting point. A large part of their quarter was driven by sales in the south. Northern stores under-performed their southern stores by 7 percentage points. So there's a big opportunity for Nordstrom to drive some better and sales in the north. I think it's just going to take more international shoppers to come here, again into these stores and buy, buy, buy.