Shares of upscale retailer Nordstrom (NYSE:JWN) were down sharply on Thursday morning, as growing concerns about the effects of the novel coronavirus pandemic on businesses drove a broad-based market sell-off.
As of 10:30 a.m. EDT, Nordstrom's shares were down about 14.5% from Wednesday's closing price.
Investors and analysts are coming to grips with the likelihood that the response to the COVID-19 pandemic will involve so-called "social distancing" measures that will keep consumers out of public areas (like retail stores) for at least several weeks.
If that happens, it seems likely that Nordstrom's in-store sales in the U.S. and Canada will fall dramatically from year-ago levels, at least for a few months. That's the best case. A worse case: Stores could be closed altogether for an extended period.
That's probably the biggest concern on investors' minds right now. But there's another reason to worry: Even if stores can stay open, and even if in-store traffic doesn't drop too sharply, Nordstrom's supply chain may well have issues. Virus outbreaks in Asia and Italy have already disrupted the fashion industry's supply lines, a situation that will worsen as the virus spreads through Western Europe.
Last but not least: A recession now seems likely, and that won't be good for any retailer.
To the extent that there's good news, it's this: China is already starting to get back to normal. The worst of the pandemic could pass in several weeks, meaning that the impact on Nordstrom's revenue might not last more than a quarter or two. It remains a healthy and well-managed company; long-term-minded investors should take that into account right now.