Shares of Nordstrom (JWN) fell in early trading, despite reporting third quarter sales that beat analysts' expectations, after its Trunk Club unit fell short of forecasts. Separately, shares of peer J.C. Penney (JCP) reported a surprise drop in sales for its own third quarter. The retailers' reports followed reports yesterday from peers Macy's (M) and Kohl's (KSS), which both reported lower sales and same-store sales for the quarter.

NORDSTROM BEATS, NO THANKS TO TRUNK CLUB: After the market close yesterday, Nordstrom said its adjusted earnings per share for Q3 was 84c, beating analysts' estimates of 51c. Revenue for the quarter also beat expectations, with sales of $3.5B exceeding the $3.48B analysts were predicting, on a comparable sales increase of 2.4%; excluding the impact of the retailer's Anniversary Sale, Nordstrom said SSS would have increased 0.4%. Meanwhile, sales at Nordstrom Rack and HauteLook rose 10.1%, with comparable sales improving 3.9%. Nordstrom reported a $197M goodwill impairment charge in Q3 related to Trunk Club, which ships customers clothing and accessories selected by personal stylists. Looking ahead, Nordstrom now expects fiscal 2016 adjusted EPS of $2.85-$2.95 with sales increasing about 3.5% and SSS roughly flat with last year. It previously forecast EPS of $2.60-$2.75, with sales up 2.5%-4.5% and SSS down 1% to up 1%. Prior to the earnings report, analysts expected FY16 EPS of $2.73 and revenue of $14.82B. Commenting on the Trunk Club, which Nordstrom bought in 2014, the company said, "While this business continues to deliver outsized top-line growth, current expectations for future growth and profitability are lower than initial estimates." Nordstrom said that to improve the customer experience and better position Trunk Club's business for profitable growth, "the company is making a number of operational changes." J.C.

PENNEY'S SALES MISS: J.C. Penney this morning reported an adjusted loss per share for its Q3 of (21c), in line with analysts' estimates, though its quarterly revenue fell below the $2.96B analysts were expecting at $2.86B and its SSS fell 0.8%, down from 6.4% growth in the year-ago period. Looking ahead, J.C. Penney lowered its SSS view for FY16 to 1%-2% growth from the 3%-4% growth view it previously predicted. J.C. Penney cited softness in apparel sales during the quarter, but noted that October sales accelerated in the last two weeks of the month, as well as calling out a benefit from appliances. On its earnings conference call, J.C. Penney said it expects its fourth quarter to be the "best performing" quarter of the year and forecast 2019 EPS of $1.40-$1.55, in line with previous estimates.

SECTOR PEERS: On Thursday, sector peers Macy's and Kohl's reported lower sales and comparable sales than analysts expected, but gave upbeat outlooks for the critical holiday season. Macy's backed its FY16 EPS outlook and said it expects sales for the year to be better than prior guidance. "The trends we saw in the third quarter give us confidence that we can deliver our expectations for Q4 and our guidance for FY16," Macy's said. Kohl's, meanwhile, said it ended its Q3 "strongly" in October and backed its FY16 EPS guidance.

WHAT'S NOTABLE: Mall-based retailers have been hurt by the increasing popularity of fast-fashion retailers like Zara, Forever 21 and H&M, as well as an increase in online shopping.

ANALYST COMMENTARY: Following Nordstrom's better than expected sales, Maxim analyst Tom Forte raised his price target on the stock to $61 from $54, and said the sales were likely influenced by the positive contribution of the company's new rewards initiative. Additionally, Forte believes Nordstrom's efforts to improve the profitability of its e-commerce sales are having a positive impact on the company's earnings. William Blair analyst Amy Noblin said she is "encouraged" by Nordstrom's inventory management and focus on brands "that are working." She believes the quarter reinforces the company's "One Nordstrom" strategy. On J.C. Penney, Craig-Hallum analyst Alex Fuhrman said the retailer continues to reduce its SG&A expenses, which resulted in EPS and EBITDA results that were in-line.

PRICE ACTION: In early trading, Nordstrom is up fractionally to $56.18 and J.C. Penney shares are flat.

OTHERS TO WATCH: Kohl's is up about 4%, while Dillard's (DDS), another retailer that just reported its results, is falling 5%.