Shares of luxury department store chain company Nordstrom Inc jumped by more than 4% during the trading session on Thursday after the company delivered a second quarter earnings that beat most analyst estimates. Department store chains have recently been challenged due to the growing popularity of e-commerce and online shopping sites that have made overall consumer experience easier for many.
For the quarter that ended last July 29, the department store chain posted an earnings of $0.65 per diluted share slightly beating most analyst estimates of $0.64 per share. Nordstrom’s same-store sales jumped during the period by 1.7% with its net sales rising by 3.5% year over year at $3.79 billion meeting consensus analyst estimates of $3.79 billion.
However, it was still Nordstrom’s online sales that led the company to post an earnings beat with its online sales attributing 20% growth for the quarter while Nordstrom Rewards contributing around 56% of their sales compared to the program’s 48% growth during the same period last year. Nordstrom also has currently around 9.4 million active members under its Rewards or loyalty program which represents a rise of 50% from the past year.
Last June, the company announced that the company would be shifting the ownership of the company into a private equity. The announcement sent the company’s shares jumping by 18% after investors saw the move as an opportunity for the company to compete with rising online e-commerce companies such as Amazon and WalMart who has been moving most of their operations and expansion into the online space. The department store industry then has lost around 21% amidst the online competition with Nordstrom losing more than 14% alone. The Seattle-based company is now set to acquire 100% of their outstanding shares.
This would mean that the company would be owned starting then primarily by the owners and that it would not fully depend on its public stock market for its growth. The company was seen by investors as the company owner’s commitment in growing their business despite the tight competition. However, this would mean that the company would face additional debt that comes with the ownership change and other remodeling efforts.
Nordstrom shares rallied by as much as 6.9% during Thursday’s session. The company also announced an upgrade in its full year earnings outlook with their sales set to grow by 4% from their previously forecasted growth of 3%. Nordstrom also forecasted an earnings of around $2.85 to $3 per share from previously estimating around $2.75 EPS.