Shares of upscale retailer Nordstrom (NYSE:JWN) were down sharply on Monday morning as a steep drop in oil prices and growing concerns about a virus pandemic drove a broad-based market sell-off.
As of 11 a.m. EDT, Nordstrom's shares were down about 8% from Friday's closing price.
Investors on Monday were scrambling to grasp the potential implications of the novel coronavirus, COVID-19, which appears to be spreading rapidly in the United States.
For Nordstrom, those implications aren't too hard to see. First, anything that keeps consumers away from crowded public spaces is bad for a brick-and-mortar retailer. Second, virus outbreaks in Asia and Italy are already playing havoc with fashion's supply lines: Even if Nordstrom's stores have plenty of foot traffic, the chain might still struggle to keep key items in stock.
And, of course, if the virus and other market shocks -- like the collapse in oil prices -- push the U.S. economy into recession, that will hurt Nordstrom's foot traffic, sales, and margins for at least a few quarters.
Nordstrom's full-year guidance, issued last week, indicated that investors should expect a sluggish rate of sales growth, between 1.5% and 2.5%, for the fiscal year that will end on Jan. 31, 2021. The company hopes to be able to boost margins -- but that effort will depend on a stable economy, which is by no means a certainty.