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Nordstrom, Ralph Lauren, and Urban Outfitters Are Trading Lower as Macy's Explores Restructuring

By John Rosevear - Apr 13, 2020 at 3:35PM

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Those first three are probably all in better shape than Macy's, but "better" is relative.

What happened

Shares of upscale retail and apparel companies were moving lower on Monday after Reuters reported that retail giant Macy's (M 0.51%), the largest U.S. department store chain by retail sales, has hired an investment bank and attorneys to explore financing and debt-restructuring options.

Here's where these three companies were trading as of 3 p.m. EDT, relative to their closing prices on Friday.

  • Nordstrom (JWN -0.08%) was down 4%.
  • Ralph Lauren (RL -1.00%) was down 6.9%.
  • Urban Outfitters (URBN -0.09%) was down 5%.

So what

The Reuters article, published on Sunday, appears to have set off a wave of selling among brick-and-mortar retail and apparel stocks.

Nordstrom, Ralph Lauren, and Urban Outfitters were faring better than some of their mass-market rivals on Monday afternoon, likely in part because they have sizable online operations that have partially offset the revenue they're losing from their physical stores being closed in response to the COVID-19 pandemic. 

The sign outside a Ralph Lauren store in Paris.

Ralph Lauren's stores in North America and Europe remain closed, but some of its Asian stores have reopened. Image source: Ralph Lauren.

All three temporarily shuttered most of their locations outside of China in mid-March, and all three have since made moves to conserve cash and shore up their balance sheets. 

  • Nordstrom said last week that it had priced an offering of $600 million in senior secured notes. The notes are secured by several pieces of real estate, including six stores and its Seattle headquarters. Nordstrom is better-positioned than rivals like Macy's, in part because of its online operation: About a third of Nordstrom's sales were generated via its online stores last quarter. 
  • Ralph Lauren furloughed its retail employees as of April 11, has cut executive salaries, and has reduced its orders for fall, but it has yet to announce any additional financing moves. Like Nordstrom, Ralph Lauren may be in better shape than many rivals; its retail stores in China and South Korea have reopened, as have the fulfillment centers that support its e-commerce segment. 
  • Urban Outfitters said on March 31 that it had borrowed $220 million to bolster its balance sheet, and cut a slew of expenses including $100 million in planned capital expenditures. It has also stopped paying rent on its retail locations for the time being. Most of the company's employees are on furlough until June.

Now what

Investors in these three companies will have to wait a few more weeks for detailed updates from management. Urban Outfitters will report its fiscal 2021 first-quarter results on May 19; Nordstrom and Ralph Lauren haven't yet announced dates for their next quarterly earnings reports, but both typically report in the second half of May.

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

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Stocks Mentioned

Nordstrom, Inc. Stock Quote
Nordstrom, Inc.
$24.22 (-0.08%) $0.02
Urban Outfitters, Inc. Stock Quote
Urban Outfitters, Inc.
$21.93 (-0.09%) $0.02
Ralph Lauren Corporation Stock Quote
Ralph Lauren Corporation
$98.13 (-1.00%) $0.99
Macy's, Inc. Stock Quote
Macy's, Inc.
$19.63 (0.51%) $0.10

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

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