For the quarter ending July 29, Nordstrom reported earnings of 65 cents per diluted share, just ahead of the 64 cents per share expected by analysts surveyed by FactSet. Net sales of $3.79 billion, up about 3.5% year-over-year, topped the consensus estimate of $3.79 billion; same-store sales rose 1.7% during the same period.
Nordstrom's digital efforts also performed well in the quarter. Online sales grew 20% during the period, with the members-only HauteLook site's sales growing 27%. The Nordstrom Rewards loyalty program boasts 9.4 million active members in the U.S. and Canada, up 50% year over- ear. Nordstrom Rewards customers accounted for 56% of second-quarter sales, up from 48%.
Shares rose 2.3% to $45.92 in after-hours trading Thursday.
This is the first earnings report since Nordstrom announced on June 8 that members of its founding family, who hold a 31% stake in the company, are considering taking the company private. It might be difficult for the family to find a private equity sponsor to join them, however: sale processes at Abercrombie & Fitch Co. (ANF - Get Report) and private equity-backed Neiman Marcus Group Inc. have been unsuccessful.
Women's Wear Daily reported last month that bankers were worried that a deal could not be completed in time. According to Reuters, Leonard Green & Partners LP, Apollo Global Management LLC (APO - Get Report) and KKR & Co. LP (KKR - Get Report) have held talks to back the buyout.
As a private company, Nordstrom would be free of investors "skeptical of the tough but necessary journey ahead" in a challenging retail environment, according to Cowen and Co. LLC analyst Oliver Chen.
"Operating with lower or negative comp store sales, as well as making drastic decisions to close stores and spend more on digital innovation could be the right long-term decision versus Wall Street's near-term judgement," Chen wrote. "Going private could also help protect the JWN brand, and help retail reset from ongoing promotional industry concerns. Being private could actually enable the company to be more agile, innovative and competitive, if the company would benefit from more near-term pain for long-term gain."
A successful buyout would also bode well for Macy's Inc. (M - Get Report) and Kohl's Corp. (KSS - Get Report) , both of which "have free cash flow yields in the high teens and manageable levels of net debt," Chen added.
Nordstrom also boosted its full-year guidance. The company currently expects net sales to rise 4%, compared to the prior expectation of 3% to 4% growth. Earnings expectations were also boosted slightly, to a range of $2.85 to $3.00 per share from $2.75 to $3.00 per share.
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