COVID-19 has done a number on Nordstrom (NYSE:JWN).
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.
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."