Please ensure Javascript is enabled for purposes of website accessibility

Nordstrom Warns It's 'Impossible' to Estimate Impact of COVID-19

By Rich Smith – Apr 8, 2020 at 1:42PM

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

The upscale retailer's recent SEC filing paints a grim picture.

COVID-19 has done a number on Nordstrom (JWN 2.54%).

The coronavirus has damaged innumerable retailers, but Nordstrom has been hit particularly hard, as it was forced to suspend dividends, halt share buybacks, and take an $800 million loan to remain solvent last month. By early April, things had gotten so bad that Fitch Ratings downgraded Nordstrom's debt.

A sign in a shop window says "Sorry we are closed."

Image source: Getty Images.

The latest shoe dropped this morning, when Nordstrom made a form 8-K filing with the SEC. Adding coronavirus to its list of risk factors investors should consider before investing in the stock, Nordstrom said, "results for the quarter ending May 2, 2020 and beyond will be adversely impacted in a significant manner" by the coronavirus pandemic.

How big will the impact be? Nordstrom's assessment is chilling: It's "impossible to estimate the duration or negative financial impact of the COVID-19 pandemic on the business," it said.  

The upscale retailer prefaced this warning with a description of the "several steps" it has already taken to shore up its business, including the $800 million borrowed and a further $500 million in "targeted further reductions of ... operating expenses, capital expenditures, and working capital."

Despite these actions, Nordstrom remains in dire straits. Most of the company's workforce "has been furloughed or assigned zero hours of work," though Nordstrom says it is still providing benefits to those employees through the end of May 2020.

At the same time, all physical stores have been temporarily closed to the public, with no firm re-opening date. Although Nordstrom still has some revenue coming in through online orders, management warns, "the longer our stores remain closed to the public, the greater impact it will have on our results of operations and financial condition."

Ultimately, it said, "our financial situation could become distressed."

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Nordstrom. The Motley Fool has a disclosure policy.

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
$18.19 (2.54%) $0.45

*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
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

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.