Nordstrom is taking precautionary measures to strengthen its financial position in response to the rapidly changing market circumstances arising from the COVID-19 pandemic.
The company stated that it would, out of an abundance of caution, increase its cash position and preserve financial flexibility by suspending its quarterly cash dividend beginning in the second quarter of fiscal 2020; targeting further reductions of more than $500 million in operating expenses, capital expenditures and working capital beyond its initial savings plan of $200 to $250 million in fiscal 2020, which includes aligning inventory to sales trends; and suspending share repurchases.
In addition, Nordstrom maintained that it would actively pursue further options to increase financial flexibility, although it added that the company has no immediate need to raise capital. Nordstrom intends to evaluate accessing the financing markets and will look to raise capital, when and if the company deems it prudent to strengthen its balance sheet. Nordstrom asserted that it exited fiscal 2019 with a healthy balance sheet including $853 million in cash.
“During this time of great uncertainty, we’re making decisions to best position Nordstrom for our employees, customers and shareholders,” said company CEO Erik Nordstrom. “We are proactively taking steps to strengthen our financial flexibility to help us navigate through this unprecedented situation.”
On March 16, the company temporarily closed its stores, including Nordstrom full-line and Nordstrom Rack, to help in slowing down the spread of COVID-19, while maintaining its online business. With ongoing actions to stimulate customer demand and clear excess inventory, sales from Nordstrom’s online business are helping to partially mitigate the impact from store closures, the company said.