Why Nordstrom, Inc.(NYSE: JWN) stock is going gangbusters today

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Nordstrom, Inc.(NYSE: JWN) stock rose over 6.8% on 17th August, 2018 (as of  9:07 AM GMT-4; Source: Google finance) after the company posted better than expected results for the second quarter. Department store companies have been under pressure because more people are shopping online or at discount retailers. JWN said 34 percent of its sales came through digital channels in the quarter, up from 29 percent a year ago. The company has recently completed the one-of-a-kind Anniversary Sale, an event that distinguishes us in the industry by featuring new arrivals at reduced prices for a limited time. Anniversary generates significant volume that rivals even the holiday period.

JWN in the second quarter of FY 18 has reported the adjusted earnings per share of 95 cents, beating the analysts’ estimates for the adjusted earnings per share of 83 cents. The company had reported the adjusted revenue growth of 7 percent to $4.07 billion in the second quarter of FY 18, beating the analysts’ estimates for revenue of $3.99 billion. JWN has reported a decent 4 percent increase in comparable sales over a year earlier, powered by solid growth at both its full-line department stores and its off-price division. Gross margin has improved to 35 percent, in part because it didn’t have to resort to excessive discounting.

Why Nordstrom, Inc.(NYSE: JWN) stock is going gangbusters today

Moreover, from a merchandizing perspective, the partnerships with strategic brands enabled the company to provide customers with compelling offers and strengthened the product margin. In the second quarter, sales from strategic brands grew 13%, making up around 45% of the full price business.

JWN now expects full-year earnings to be $3.50 to $3.65 per share, with revenue to bein the range of $15.4 billion to $15.5 billion. Previously it had predicted earnings between $3.35 and $3.55 and revenue between $15.2 billion and $15.4 billion

From a comp perspective, the company has raised the full year expectations from a 0.5% to 1.5% increase to 1.5% to 2% increase. This assumes a continuation of underlying sales trends in the second half of the year. From a gross profit perspective, the company continue to expect modest improvement in product margins and a consistent occupancy rate relative to last year.

For the second half of the year, the company expect Q3 to contribute roughly 30% in EBIT and Q4 to contribute 70%. Q3 EBIT margin is planned to deleverage on fixed expenses and includes a $30 million unfavorable shift from Q2 associated with the impact of revenue recognition.

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