Nordstrom announced today several precautionary measures to strengthen its financial position in response to the rapidly changing market uncertainty from the Covid-19 pandemic. They include:
- Suspending its quarterly cash dividend beginning in the second quarter of fiscal 2020. The company remains committed to paying dividends over the long-term and will seek to resume payment when appropriate.
- Drawing down $800 million on its revolving line of credit.
- In addition to its initial savings plan of $200 to $250 million in fiscal 2020, targeting further reductions of more than $500 million in operating expenses, capital expenditures and working capital. This includes ongoing efforts to realign inventory to sales trends.
- Suspending share repurchases.
In addition to these actions, Nordstrom continues to actively pursue further options to increase financial flexibility. While there is no immediate need to raise capital at the present time, the company intends to evaluate accessing the financing markets and will look to raise capital, when and if it deems it prudent to further strengthen its balance sheet.
“During this time of great uncertainty, we’re making decisions to best position Nordstrom for our employees, customers and shareholders,” states Erik Nordstrom, CEO. “We are proactively taking steps to strengthen our financial flexibility to help us navigate through this unprecedented situation.”
Nordstrom exited fiscal 2019 with a healthy balance sheet, including $853 million of cash. With more than 100 years of experience managing through multiple business cycles, the retailer is taking the following actions out of an abundance of caution to increase its cash position and preserve financial flexibility. That effort has also involved the temporary closures of its stores to do its part in slowing down the spread of COVID-19. Nordstrom continues to serve customers through its online business, which represented one-third of fiscal 2019 sales. Through ongoing actions to stimulate customer demand and clear excess inventory, sales from its online business are helping to partially mitigate the impact from store closures.