Nordstrom Inc said on Tuesday a 37 percent surge in online sales helped the upscale department store top analysts’ earnings expectations and boost confidence about its holiday performance despite a more competitive, promotional playing field.

Shares of the Seattle-based retailer were trading nearly 5 percent higher after the bell.

“We are encouraged by the positive momentum and expect continued progress in the fourth quarter and into 2021,” said Pete Nordstrom, president and chief brand officer of Nordstrom.

Net earnings more than halved to $53 million, or 34 cents per share, while analysts on average were expecting a loss of 6 cents per share, according to IBES data from Refinitiv.

On a conference call with analysts, however, company executives said they expect a percentage decline in fourth-quarter net sales in the low 20s range versus market estimates of a decline of about 11 percent. The company also expects shipping charges and premium holiday pay to hurt earnings.

After suffering a months-long closure of its stores, Nordstrom, like its peers, has had little choice but to pour money into strengthening its online, delivery and pickup services to keep pace with deeper-pocketed, “essential” retailers like Walmart Inc and Target Corp.

With digital accounting for 54 percent of total sales, “We are a majority digital business right now,” Nordstrom said.

Shoppers staying home to curb the spread of the virus found themselves purchasing activewear, home decor and beauty products as opposed to upscale apparel and formal work attire.

Sales in Nordstrom’s higher-margin, full-price channel decreased 7 percent, compared with a 58 percent slump in the previous quarter, boosted by the Anniversary Sale moving to the third quarter from the second. The retailer also benefited from cutting costs and better managing its inventory, it said.

“While the overall quarter wasn’t quite as positive as some of the public and the investment community might have expected ... the company’s online sales were 54 percent of their total sales,” said Nick Shields, senior analyst at Third Bridge. “If the company can keep it at this point sustainably into next year, that’s a solid sign they have made the operational changes necessary to transform their business around e-commerce.”

The company’s net sales fell to about $3 billion in the third quarter ended October 31, from $3.57 billion last year.

By Praveen Paramasivam and Melissa Fares; editors: Devika Syamnath and Matthew Lewis.