Nordstrom suspends dividend, taps credit; doubles cost cuts
Nordstrom is taking “precautionary measures” to strengthen its financial position in response to “market uncertainty” from the novel coronavirus pandemic.
The department store retailer is suspending its quarterly cash dividend beginning in the second quarter of fiscal 2020 and drawing down $800 million on its revolving line of credit. It also is halting share repurchases.
Nordstrom noted that it exited fiscal 2019 with a healthy balance sheet, including $853 million of cash. The retailer said it “remains committed” to paying dividends over the long term, and will decide when it can resume payments “when appropriate.”
Nordstrom is also doubling down on its previously announced savings plan of $200 million to $250 million in fiscal 2020. It is now targeting reductions of more than $500 million in operating expenses, capital expenditures and working capital. This includes ongoing efforts to realign inventory to sales trends, the company said.
“During this time of great uncertainty, we’re making decisions to best position Nordstrom for our employees, customers and shareholders,” said Erik Nordstrom, CEO, Nordstrom, Inc. “We are proactively taking steps to strengthen our financial flexibility to help us navigate through this unprecedented situation.”
On March 16, Nordstrom announced the temporary closures of its 360-plus stores to help slow the spread of COVID-19. The retailer 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,” Nordstrom stated.
In its statement, also Nordstrom said it 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 the company deems it prudent, to further strengthen its balance sheet,” the retailer said.