Nordstrom Inc. (JWN) shares rose more than 16 percent during Thursday's session after reporting mixed second quarter financial results. Revenue fell five percent to $3.78 billion, missing consensus estimates by $140 million, but net income reached 90 cents per share, beating consensus estimates by 11 cents per share. The move follows strong earnings from other retailers, like Cato Corp. (CATO) and Stage Stores Inc. (SSI).
While full-price sales fell 6.5 percent and off-price sales fell 1.9 percent, the company reported a four percent increase in digital sales, which accounted for nearly a third of total revenue. Gross margins also exceeded expectations at 34.5 percent, which compares to 34.3 percent a year ago. Management expects that full year revenue will fall two percent and earnings will come in below its prior guidance.
Retail sales came in better than expected in July with a 0.7 percent increase. Clothing stores experienced a 0.8 percent increase in sales compared to a 0.1 percent decrease last month. Meanwhile, online and mail order sales rose 2.8 percent — the most in six months — thanks to Amazon.com Inc.'s (AMZN) Prime Day sales this month.
From a technical standpoint, the stock broke out to its 50-day moving average at $30.42. The relative strength index (RSI) rose to neutral levels of 57.30, but the moving average convergence-divergence (MACD) experienced a bullish crossover that could signal more upside ahead. These indicators suggest that the stock could have more room to run over the coming sessions before experiencing some consolidation.
Traders should watch for a breakout to reaction highs at around $34.00 before seeing a period of consolidation. If the stock breaks out from those levels, it could close a gap from late-May and reach $37.00. If the stock breaks down below the 50-day moving average, it could see a move to re-test lows at around $25.00 over the coming sessions.
Chart courtesy of TrendSpider.com. Author holds no position in the stock(s) mentioned except through passively managed index funds.