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Why Shares of Nordstrom Are Gaining Ground Today

By John Rosevear - Mar 25, 2020 at 2:07PM

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The proposed $2 trillion economic-rescue bill could help Nordstrom recover later in the year.

What happened

Shares of upscale retailer Nordstrom (JWN -4.13%) were moving up on Wednesday afternoon, as a likely $2 trillion economic-rescue package made investors more optimistic about a quick post-pandemic recovery.

As of 1:45 p.m. EDT, Nordstrom's shares were up about 5.1% from Tuesday's closing price.

So what

CEO Erik Nordstrom has done what he can to put the company in position to recover once the coronavirus pandemic passes. The company's brick-and-mortar stores in the U.S. and Canada were shut down on March 17, and it suspended its dividend and share-buyback programs on Monday, while drawing down $800 million from its existing line of credit. 

While there are questions about how long the company will be able to operate the fulfillment centers that support its online businesses, Nordstrom appears to be in solid shape to weather the shutdown.

A Nordstrom sign on the outside of a store.

Image source: Nordstrom.

The question is, what happens after the coronavirus fades in North America?

Most experts see one of two possibilities: Either the U.S. and Canadian economies recover quickly, in which case Nordstrom will be fine, or the region endures a prolonged recession, in which case things get complicated for Nordstrom. 

The $2 trillion economic-rescue package nearing approval in Congress on Wednesday is intended in part to improve the odds that the post-coronavirus economic recovery will be a quick one. That's why it's bullish for Nordstrom.

Now what

Nordstrom also said on Monday that it's looking to cut $500 million in costs, to try to stretch its cash as long as possible, and that it could look to raise additional cash via an equity or debt offering later in the year. 

For investors in the company's battered shares, much will turn on how things unfold after the pandemic passes.

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Nordstrom, Inc. Stock Quote
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