The retailer’s assessment of this crisis is an issue that many are likely facing, as businesses selling non-essential goods such as clothing, shoes and luggage have come to an almost complete standstill.
“The longer our stores remain closed to the public for a long time, the more they will have an impact on our operating results and our financial situation, and if our physical locations remain closed to customers for a long period, our financial situation could become disrupted”, The Seattle-based department store chain said Wednesday in a securities brief.
Nordstrom said the pandemic has so far had a “substantial impact” on its business. He said he expects his results for the quarter ending May 2 and beyond to be “negatively impacted significantly”.
Nordstrom has already taken a number of steps to reduce costs and increase liquidity, as have many other retailers. It has taken over the majority of its workforce, suspended the payment of its quarterly dividend beginning in the second quarter of 2020, withdrew $ 800 million from its revolving credit facility and suspended share buybacks.
It closed all of its brick and mortar stores, with no firm reopening date.
“As the Company continues to generate sales and liquidate excess inventory by fulfilling online orders from customers of its physical stores and fulfillment centers, we do not know when we will be able to reopen our stores physical to customers, “Nordstrom said Wednesday.
An analysis by Cowen & Co. late last month said that US department stores, including Nordstrom, could reach eight months with stores closed before liquidity problems escalate.
J.C. Penney and Nordstrom are doing a little better and have enough money to last eight months with their stores closed, said Cowen. Kohl’s and Macy’s have enough for five months, he said. Cowen made the predictions by assuming that all of these retailers bring in $ 0 in revenue from their brick and mortar stores.
Nordstrom has already withdrawn its earnings outlook for 2020. Net sales in fiscal 2019 decreased 2.2% to $ 15.13 billion, while net profit fell to 496 million dollars, compared to $ 564 million in fiscal 2018.
Nordstrom’s shares were up almost 10% on Wednesday morning. The stock has dropped more than 52% this year. Nordstrom has a market capitalization of $ 3.1 billion.