Nordstrom Inc., the largest U.S. luxury department-store chain, surged as much as 7.7 percent after posting second-quarter profit that topped analysts’ estimates, helped by higher sales at its off-price Rack chain and its Anniversary promotional event.
Earnings were 67 cents a share in the quarter, the Seattle-based company said in a statement Thursday. Analysts predicted 57 cents, on average. Sales slipped 1.4 percent to $3.65 billion, just missing the $3.68 billion projected.
The results signal that Nordstrom has been successful in appealing to value-conscious customers at its discount chain as well as its full-price locations. The department store’s Anniversary promotion posted an “all-time high” in sales volume, Co-President Blake Nordstrom said on a conference call to discuss the quarter. Nordstrom also has been slashing costs and reducing its capital investments to stay ahead of declining mall traffic.
“Department stores are not dead yet — that’s the main takeaway,” said Michael Halen, a Bloomberg Intelligence analyst. “They’ve been ahead of the curve, they’re cutting back on capital expenditures and generating cash they can return to shareholders.”
The shares rose as high as $51.23 in New York. Thatfollowed a 7.5 percent gain Thursday.
Net sales for the Rack brand — which includes the chain’s website and HauteLook — rose 11 percent in the quarter. Sales for full-line Nordstrom stores in U.S. and Canada, as well as the website and Trunk club, slipped 0.4 percent.
Nordstrom’s results followed similarly upbeat reports from Macy’s Inc. and Kohl’s Corp., both of which posted profit that beat analysts’ estimates earlier on Thursday. While all three chains have been working to trim expenses, Macy’s announced the boldest move yet, vowing to shut about 100 full-line stores, representing 14 percent of its total locations. Macy’s shares surged 17 percent, and Kohl’s climbed 16 percent.