Nordstrom's department store Q2 discount business sales surged by 9%, raising full-year guidance at the lower end, with a post-market increase of over 10% | Financial Report News

American mid-to-high-end chain retailer Nordstrom just finished a quarter with better-than-expected performance, with its discount chain business Rack performing even more impressively. The company is more optimistic about its full-year performance, but remains cautious about the outlook for the second half of the year. On Tuesday, August 27th, after the U.S. stock market closed, Nordstrom announced its financial results for the second quarter of the fiscal year ending August 3, 2024. 1) Key Financial Data: EPS: Adjusted diluted earnings per share (EPS) for the second quarter were $0.96, a 14.3% year-on-year increase, compared to analysts' expectations of $0.72. Revenue: Total revenue for the second quarter was $3.89 billion, slightly above analysts' expectations of $3.88 billion; net sales for the quarter were $3.79 billion, a 3.4% year-on-year increase, compared to analysts' expectations of $3.78 billion. 2) Performance Guidance: EPS: Full-year EPS is expected to be $1.40-$1.70, down from the original forecast of $1.65-$2.05. Revenue: Full-year revenue is expected to decline by 1% to grow by 1%, revised from the previous forecast of a 2% decline to 1% growth. Profit Margin: Full-year EBIT margin is expected to be 3%-3.4%, adjusted from the previous forecast of 3.5%-4%. After the financial report was released, Nordstrom, which had fallen more than 2%, surged in after-hours trading, with the post-market gain exceeding 10% at one point. The net sales of Nordstrom's discount store business Rack in the second quarter exceeded expectations with a year-on-year growth of 8.8%, far outpacing the company's total sales. The same-store sales growth for this business in the quarter was 4.1%, much stronger than the overall same-store sales growth of 1.9%. Nordstrom mentioned that its annual anniversary promotions contributed to Rack's business growth. Analysts believe that the second-quarter data may alleviate investors' concerns about the unstable performance of Rack. High inflation and high interest rates have prompted consumers to turn to discount retailers for shopping, boosting the performance of companies like TJX Cos and Ross Stores. Last week, Target's financial report showed better-than-expected performance, reflecting increased foot traffic due to price reductions. In its latest guidance, Nordstrom raised the lower end of its revenue guidance, with the expected decline in minimum revenue adjusted from 2% to 1%. The management stated that they remain cautious about the performance in the second half of the year, as holiday demand in the latter part of the year will drive overall retail sales. Nordstrom's Chief Financial Officer (CFO) Cathy Smith mentioned that the industry still faces uncertainties, and like other retailers, most of Nordstrom's profits come from the second half of the year. Typically, two-thirds of the company's profits come from the second half of the year, and the current adjustments are carefully considered in light of this