Nordstrom shares rose after the department-store chain reported better-than-expected results, giving investors renewed optimism as the company enters the crucial holiday period.
Adjusted earnings per share were 34 cents for the third quarter ended Oct. 31, better than the 7-cent loss analysts had predicted on average, while the 16% sales decline marked an improvement from the 53% plunge reported the prior period. Income tax benefits from the CARES Act aided earnings per share by about 12 cents.
Chief Executive Officer Erik Nordstrom said in a statement Tuesday that “Our ability to significantly strengthen our financial flexibility early in the pandemic was key to delivering operating profitability of more than $100 million and cash flow of more than $150 million in the third quarter.”
E-commerce now accounts for more than half of Nordstrom’s business, with shoppers flocking online during the pandemic. Digital sales were $1.6 billion for the quarter, up 37% from last year.
Nordstrom’s big anniversary sale shifted this year from the second quarter to the third, and that helped buoy results, including for digital.
Executives said that activewear, home goods and beauty products have done well in recent months, as customers keep buying comfy clothes and spruce up their homes as the health crisis goes on.
The results are a welcome bit of good news for Nordstrom, which in September had its credit rating cut to junk by S&P Global Ratings. S&P cited factors including the yearslong declines in department-store sales — accelerated by the pandemic — plus declining mall traffic and low exposure to the retail sector’s strongest businesses, like home decor.
SafeGraph, a third-party data provider that tracks cell-phone location information, has consistently named Nordstrom as one of the U.S. stores with the biggest declines in foot traffic compared to the same week last year.
The shares rose 6% after regular trading in New York; shares had closed Tuesday at $24.55. Nordstrom plunged 40% this year through Tuesday’s close.