A “Temporarily Closed” sign hangs in the window of Nordstrom Inc. store in the Midtown neighborhood of New York, U.S., on Friday, March 20, 2020.
Gabby Jones | Bloomberg | Getty Images
Nordstrom said its financial situation could become distressed if its stores stay dark for much longer because of COVID-19.
The retailer’s assessment of this crisis is one that many are likely dealing with, as businesses that sell nonessential goods such as apparel, shoes and luggage have reached an almost complete standstill.
“The longer our stores remain closed to the public, the greater impact it will have on our results of operations and financial condition, and if our physical locations remain closed to customers for an extended period of time our financial situation could become distressed,” the Seattle-based department store chain said Wednesday in a securities filing.
Nordstrom said the pandemic, so far, has had a “substantial impact” on its business. It said it expects its results for the quarter ended May 2, and beyond, to be “adversely impacted in a significant manner.”
Nordstrom has already taken a number of measures to cut costs and raise additional liquidity, as have many other retailers. It has furloughed the majority of its workforce, suspended its quarterly dividend payment effective in the second quarter of 2020, drawn down $800 million on its revolving credit facility and halted share repurchases.
It has closed all of its bricks-and-mortar stores, with no firm reopening date set.
“While the Company continues to generate sales and clear excess inventory by fulfilling customer online orders from both its physical stores and its fulfillment centers, we are uncertain when we will be able to reopen our physical stores to customers,” Nordstrom said Wednesday.
An analysis by Cowen & Co. late last month said that America’s department stores, including Nordstrom, can make it as much as eight months with closed stores before liquidity troubles really being to mount.
J.C. Penney and Nordstrom fared a bit better and have enough cash to last eight months with their stores closed, Cowen said. Kohl’s and Macy’s have enough for five months, it said. Cowen made these forecasts assuming all of these retailers are bringing in $0 in revenue from their bricks-and-mortar stores.
Nordstrom has already withdrawn its 2020 earnings outlook. Its net sales in fiscal 2019 fell 2.2% to $15.13 billion, while net income fell to $496 million, from $564 million in fiscal 2018.
Nordstrom shares were last up nearly 10% Wednesday morning. The stock has fallen more than 52% this year. Nordstrom has a market cap of $3.1 billion.