Please ensure Javascript is enabled for purposes of website accessibility

Nordstrom Suspends Dividends and Share Buybacks, Borrows $800 Million

By Rhian Hunt - Mar 23, 2020 at 7:17PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It is also taking action to adjust its inventory and lower capital expenditures.

Looking to fortify its liquidity as coronavirus shutdowns continue to batter the US economy, Nordstrom (JWN -2.70%) 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.

The interior of a clothing store with fashionable women's clothing.

Image source: Getty Images.

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."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Nordstrom, Inc. Stock Quote
Nordstrom, Inc.
JWN
$20.56 (-2.70%) $0.57

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
311%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.