As shoppers buy more clothes and shoes, Nordstrom exceeds Wall Street's earnings expectations.

• Wall Street's revenue expectations were exceeded by Nordstrom, and the company provided a slightly optimistic full-year sales forecast.
• Despite the pressure on discretionary merchandise and the luxury sector, the retailer's sales growth is noteworthy.
• The sales of women's apparel and activewear increased by double digits year over year, contributing to the company's improved performance through clothing and shoe purchases.

On Tuesday, the company exceeded Wall Street's quarterly sales expectations, with revenue increasing by approximately 4% year over year from customers purchasing clothing, shoes, and activewear at both its flagship department store and its discount chain.

Although the Seattle-based retailer exceeded expectations in its quarterly sales, it only slightly improved its full-year sales forecast, taking a cautious approach as it prepares for the peak holiday season. The company now anticipates full-year revenue, including retail and credit card sales, to fall between flat and a 1% increase, compared to its previous range of a 1% decline to 1% growth. However, it maintained its earnings outlook for the year, which is between $1.75 and $2.05 per share.

The company's results indicate that its efforts to attract discerning shoppers are yielding positive results. Women's apparel and activewear sales increased by more than 10% year over year, while shoes, men's apparel, and kids' sales grew by mid-to-high single digits year over year.

In the fiscal third quarter, the sales of women's apparel, shoes, and men's apparel grew sequentially compared to the second quarter.

"We have a lot of options and our results give us confidence that we're on the right track," he stated. "Moving forward, we will continue to enhance our shopping experience as we aim to maintain the positive momentum we've built up throughout the year."

In the three-month period ending November, Nordstrom's performance exceeded Wall Street's expectations, as indicated by a survey of analysts conducted by LSEG.

• It was not immediately clear if the adjusted earnings per share of 33 cents was comparable with analysts' estimates.
• Revenue: $3.46 billion vs. $3.35 billion expected

In the third quarter of the fiscal year, Nordstrom's net income was $46 million, or 27 cents per share, which was lower than the $67 million, or 41 cents per share, earned in the same quarter the previous year. Despite this, revenue increased from $3.32 billion in the previous quarter.

Nordstrom reported adjusted earnings per share of 33 cents after excluding a charge related to accelerated depreciation of technology.

Nordstrom's two brands, including its namesake and Nordstrom Rack, experienced a 4% increase in comparable sales, surpassing analysts' expectations of a 0.7% gain.

Despite the decline in sales of discretionary merchandise and luxury items, Nordstrom's sales growth is noteworthy. In contrast to other retailers such as Walmart, Best Buy, and Target, Nordstrom has reported a modest increase in sales. Customers have been more selective in their purchases, focusing on items that are necessary rather than luxury items.

Despite a calendar shift with its Anniversary Sale, Nordstrom's sales growth still grew. In the previous quarter, eight days of the sale were included in the three-month period, but only one day fell in the current quarter. This resulted in a negative impact on net sales of approximately 1%.

Macy's reported that its third-quarter sales decreased by 2.4%, while its owned and licensed businesses plus online marketplace experienced a 1.3% decline in comparable sales.

Nordstrom has utilized its discount store, Nordstrom Rack, to boost sales and open new locations. However, in the third quarter, both Nordstrom and Nordstrom Rack reported comparable sales growth, with Nordstrom's sales increasing by 4% and Nordstrom Rack's sales increasing by 3.9%.

Nordstrom's latest quarterly update was released two months after the founding family made a new offer to take the company private. In September, a filing revealed that CEO Erik Nordstrom, President Peter Nordstrom, and Mexican retailer El Puerto de Liverpool sent a non-binding letter to purchase the chain for $23 per share.

Since a Reuters report in March that Nordstrom's founding family wanted to take the company private, shares of the company have surged, with a 32% increase in stock value so far this year, outpacing the S&P 500's 26% gains.

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