Nordstrom was highly affected by the COVID-19 pandemic during the year. However, the third quarter earnings surprise has attracted investors.
Nordstrom, Inc. (JWN) is ending the year on a high after suffering heavily from the global pandemic. Over the past month, JWN stock has soared over 110% as the investors step in seeing future growth.
JWN shares surged on the unexpected Q3 results. The stock surged from $24.55 from the previous close to the day’s high of $29.54 on Thursday. At close, JWN was trading at $27.41 up by 11.65%.
This marks the stock price jumping from $12.58 on Oct. 27 to $29.54, showing a more than double increase.
Recently, Nordstrom posted its third quarter 2020 results which came as a surprise. The quarterly EPSimproved to $0.34 per share beating the $0.07 loss projected by analysts. This was the first time that the company has exceeded its EPS in the last four quarters.
Moreover, the company recorded a sales decline of 16% up from the prior quarter decrease of 53%. As the situation is getting better, the company is gradually recovery from its sales losses.
On Tuesday, the CEO of the company, Erik Nordstrom noted that their ability toturn things around with financial flexibility, early during the pandemic, was the main reason that helped them to increase their operating profit to $100 million. The cash flow also improved to more than $150 million in Q3 2020.
Erik also commented that online sales had stronger growth with the shutdown of its physical stores. The online sales during Q3 were $1.6 billion, reflecting a total of 52% of Nordstrom’s business.
The revenue was $3.09 compared to $3.67 in the same quarter a year ago. While, the net income was $53 million, down from $126 million in Q3 2019.
One of the main reasons that leveraged the third quarter results going up was the shifting of big anniversary sale from Q2 to Q3. This helped the digital sales to increase 37% from the prior year.
The management addressed that noted an increase in the purchase of activewear, beauty products, and home goods during the quarter. The customers are buying more cloths and accessories online during the pandemic.
The CFO, Anne Bramman updated the outlook for the ongoing quarter. She highlighted that the sales are expected to decline to the low 20-percentage range for the fourth quarter of 2020. Still, the company forecasted a positive operating cash flow. The outlook remains uncertain due to the unsettled pandemic.