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What’s happening: Shares of Nordstrom surged during after-hours trading on Tuesday, following the release of the company’s quarterly results.
What happened: The fashion retailer reported stronger-than-expected earnings for the second quarter.
Nordstrom also raised the lower end of its comparable sales growth outlook, providing a further boost to its stock.
How were the results: The Seattle, Washington-based company reported low single-digit growth in sales for the quarter ended August 3.
Why it matters: Nordstrom recorded strong sales growth for its sportswear brands and beauty products, driven by its major Anniversary Sale event, which ran from July 15 through August 4.
The company’s sales were also boosted by its off-price brand, the Rack, and Nordstrom is looking to open 12 more Rack locations across the country before the holiday shopping season.
Total comparable sales grew by 1.9%, while GMV (gross merchandise value) climbed 3.5%. The Nordstrom banner net sales and comparable sales gained 0.9% each. Digital sales surged 6.2% in the quarter.
“Our second quarter results were solid, and we’re encouraged by the continued topline strength in both banners and the progress we’re making to expand gross margin and increase profitability,” CEO Erik Nordstrom said.
Management guided to earnings of $1.75-$2.05 per share for the full year. They also raised their guidance for annual comparable sales growth to between flat and 2%, from the earlier forecast of a 1% decline to 2% growth.
How shares responded: Nordstrom’s shares climbed 7.7% to $22.77 in extended trading hours on Tuesday, after the release of quarterly results. The stock has jumped around 16% year to date.
What to watch: Investors will continue monitoring the company’s efforts to boost sales, given its plans to focus on categories that are in high demand, including women’s apparel. The company has reduced discounts to improve its overall margins.
Context: The EUR/USD forex pair retreated after hitting about a 13-month high, as investors monitored economic cues.
Details: The euro had surged against the US dollar over the past few days, hitting around a 13-month high. The EUR/USD had got a boost from pressure on US dollar after comments from Fed Chairman Jerome Powell spurred speculations of an interest rate cut by the central bank in September.
The euro was negatively impacted by Germany reporting a decline in business sentiment for the third consecutive month in August. The Ifo Business Climate indicator for Germany fell to 86.6 in August, from 87 in the earlier month.
The GfK Consumer Climate Indicator for Germany also fell to a reading of -22.0 heading into September, from -18.6 in the prior period. The figure came worse than market expectations of -18.0. Germany’s GDP shrank by 0.1% during the second quarter, in-line with a preliminary reading but below the previous quarter’s 0.2% growth.
Markets await inflation data from Germany and the Eurozone, scheduled to be released on Friday. Inflation in Germany and the Eurozone is projected to ease to its lowest levels in more than three years. Although European Central Bank officials signalled a cautious approach in cutting interest rates, there are speculations of rate cuts of about 65 basis points by the end of the year.
Some strength in the US dollar also exerted pressure on the EUR/USD forex pair on Wednesday. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained 0.1% to reach 100.65.
The EUR/USD forex pair fell 0.08% to 1.1177, while the EUR/GBP pair slipped to 0.8433 on Wednesday.
What to watch: With no major economic reports due from the Eurozone today, investors await the release of data on economic sentiment, consumer confidence and services sentiment on Thursday. Eurozone’s economic sentiment indicator, which fell slightly to 95.8 in July from 95.9 in the prior month, is expected to remain unchanged at 95.8 in August.
Analysts expect the consumer confidence indicator to fall by 0.4 points to a reading of -13.4 in August, while the services sentiment indicator is projected to improve to 5.2 in August, from 4.8 in July.
Other Markets: US trading indices closed higher on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.02%, 0.16% and 0.33%, respectively.
Ukrainian President Volodymyr Zelenskyy announced the first successful test of a ballistic missile by its military. The news sent the RUB/USD pair lower in forex trading this morning.
Australia’s Consumer Price Index rose by 3.5% in the 12 months to July, easing from 3.8% in the prior month, which lent support to the AUD/USD forex pair.
US S&P CoreLogic Case-Shiller home price index surged 6.5% year-over-year in June. This came in above market estimates of a 6% rise and sent the Dow Jones index slightly higher on Tuesday.
Mexico’s trade deficit narrowed to $0.07 billion in July, from $0.65 billion in the year-ago month. The latest reading also came in below market expectations of a $1.35 billion gap, lending support to the MXN/USD forex pair.
The American Petroleum Institute said that US crude oil inventories contracted by 3.4 million barrels in the week ending August 23, after rising by 0.347 million barrels a week ago, which sent the WTI crude oil prices higher this morning.
France’s consumer confidence indicator and initial jobless claims, Turkey’s balance of trade, Eurozone’s loans to non-financial corporations, bank lending to households and money supply M3, Italy’s industry sales, US MBA mortgage applications, crude oil inventories, stocks of gasoline, crude oil imports and distillate stocks, Russia’s unemployment rate, business confidence, corporate profits, industrial production, real wages, GDP and retail sales, as well as Saudi Arabia’s money supply M3 and value of loans.
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