Why Nordstrom Inc. Stock Tumbled Today

What happened

Shares of�Nordstrom Inc.�(NYSE:JWN) were heading lower today after the department store chain turned in a disappointing first-quarter earnings report with comparable sales coming in lower than expected. As a result, the stock was down 9.2% as of 11:17 a.m. EDT.�

Image source: Nordstrom.

So what

Comparable sales for the period, which include e-commerce, rose just 0.6%, worse than estimates of 1.1%, as results in the off-price division were particularly disappointing, increasing just 0.4%, compared to 2.3% growth a year ago. Total revenue in the quarter increased 5.8% to $3.56 billion, beating estimates of $3.46 billion; however, adjusted for the shift in the company's Nordstrom Rewards loyalty event, the figure would have been about even with expectations.�

The slowing growth in the company's off-price division is concerning as the retailer continues to add more Rack stores, which has been seen as a main avenue for growth for the company. However, with comps decelerating in that area, the company may want to reconsider that expansion strategy.�

On the bottom line, adjusted earnings per share increased from $0.43 to $0.51, topping estimates for $0.44. In spite of that beat, investors remained focused on sales performance as the market has been skeptical of the department store sector.�

Digital sales were up 18% in the quarter and now make up 29% of total sales.

Now what

Nordstrom maintained its comparable sales outlook for the year, calling for a 0.5%-1.5% increase in that category, and lifted its earnings-per-share forecast slightly from $3.30-$3.55 to $3.35-$3.55.�

Given that improved outlook, the sell-off seems surprising. Nordstrom is a stronger business than the market is giving it credit for and is in a better position than many of its peers. Today's slide could be a good buying opportunity.