Updated from Nov. 10 with analyst comments.
Damn Nordstrom (JWN) . Talk about bringing investors an early holiday gift.
Shares of the high-end department store surged as much as 8% in after-hours trading on Thursday and in premarket trading Friday morning as third-quarter earnings came in at 84 cents a share, excluding one-time items, trouncing Wall Street forecasts for 51 cents a share.
Nordstrom's bottom line was boosted by efforts to cut costs online and better manage store inventory. Total sales rose 7.2% from the prior year to $3.54 billion. Analysts expected $3.48 billion.
Similar to other mall department stores like Macy's (M) , Nordstrom saw improving demand for apparel despite a warmer-than-expected autumn. Also, it benefited from a calendar shift of its popular Anniversary Sale into the third quarter. Same-store sales increased 2.4%, in line with analyst projections. Off-price Nordstrom Rack notched a 3.9% same-store sales gain, ahead of forecasts for a 1.1% increase.
Nordstrom's sharper focus on the bottom line has some on Wall Street jazzed up. The retailer expects to save about $50 million this year alone in shipping and fulfillment costs due to its re-energized measures to watch every penny.
"Management is executing on inventory management as well as expense discipline across technology, marketing and the supply chain," wrote Deutsche Bank analyst Paul Trussell in a note on Friday. He added, "Profitability is a new mantra for the company."
Trussell's sentiment on Nordstrom was echoed elsewhere.
"We continue to believe Nordstrom is in the early stages of unlocking earnings growth, and are encouraged as despite the consumer environment, we believe Nordstrom can drive double-digit earnings growth in 2017 with solid execution," said Keybanc analyst Ed Yruma in a note.
The company lifted its full-year earnings outlook to $2.84 to $2.94 a share from $2.60 to $2.75 a share previously. Same-store sales are now expected to be relatively unchanged for the year, compared to a previously expected decline of 1% to an increase of 1%.