Looking to fortify its liquidity as coronavirus shutdowns continue to batter the US economy, Nordstrom (NYSE:JWN) announced it would suspend its cash dividend starting in fiscal second quarter 2020. The footwear, clothing, and lifestyle retailer said the suspension is only temporary and dividends will start again as soon as conditions improve enough to warrant it.
Nordstrom is pursuing several other measures also intended to protect its cash position. These include suspending stock buybacks or repurchases. It is also looking for ways to reduce its operating expenses and streamline its inventory to save $200 to $250 million during fiscal 2020, and $500 million over the longer term.
The announcement comes a week after the retailer shut its stores in response to COVID-19, though at the time it intended to keep operating its online business, which made up approximately a third of its sales last year. The company's share value plunged this morning over fears about its fulfillment centers closing. Two of the three are located in California and Pennsylvania, making them vulnerable to the closure of nonessential businesses ordered by the governors of those states.
Though it began the year with slightly more than $85 million cash, Nordstrom has decided to draw down part of its revolving line of credit to create more liquidity during the coronavirus crisis. This move will give it an additional $800 million to keep operating through difficult times. CEO Erik Nordstrom struck a cautiously upbeat note, stating, "We are proactively taking steps to strengthen our financial flexibility to help us navigate through this unprecedented situation."