Please ensure Javascript is enabled for purposes of website accessibility

Why Nordstrom and Other Upscale Retail Stocks Were Down on Friday

By John Rosevear – May 1, 2020 at 4:01PM

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

Even if stores reopen soon, will consumers be willing to pay luxury prices?

What happened

Several upscale apparel and retail companies were trading lower on Friday, on investor concerns about the prospects for premium retail following the coronavirus pandemic and a new report that J.Crew is preparing to file for bankruptcy.

Here's where things stood for these companies as of 3 p.m. EDT on Friday, relative to their closing prices on Thursday.

  • Capri Holdings (CPRI 1.15%) was down about 6.5%.
  • Nordstrom (JWN 3.98%) was down about 5.9%.
  • Urban Outfitters (URBN 0.76%) was down about 3.2%.

So what

There was no specific news moving any of these three stocks individually on Friday afternoon. All were down, along with many other retail stocks, on broad concerns about the prospects for brick-and-mortar retail as stores gradually begin to reopen in coming weeks, the prospects specifically for upscale full-price retail given the job losses of the past two months, and concerns about the growing list of retail operators that are reportedly preparing for bankruptcy filings.

Preppy apparel retailer J.Crew has joined that latter list. The Wall Street Journal reported on Thursday night that J.Crew Group, which has $1.7 billion in debt, is in talks with lenders about potential financing for a bankruptcy restructuring. J.Crew had been planning to use proceeds from an initial public offering of its Madewell subsidiary to pay down its debt, but that IPO was canceled in March. 

A Nordstrom sign on the outside of a store.

Nordstrom will reopen soon, but will shoppers return? Image source: Nordstrom.

None of these three companies are in acute danger of bankruptcy. But all have been battered since the onset of the COVID-19 pandemic in North America in March forced most retailers to close their physical stores. 

Capri Holdings, the corporate parent of Michael Kors, Versace, and other luxury fashion brands, saw its credit rating cut to junk levels on April 2 on concerns about the effects of a possible recession that could last into 2021. 

Nordstrom's credit rating was also cut in early April, though not quite to junk levels, after which the company raised $600 million via a bond offering and cut $500 million from its capital-expenditures plan to bolster its balance sheet. 

Urban Outfitters hasn't made any moves to raise cash, but it has made some aggressive moves to cut spending since its stores closed: It was one of the first retailers to declare, late in March, that it won't pay rent while its stores are closed. 

Now what

Investors won't have to wait too long for detailed updates from these three companies' management teams, as all three are expected to report quarterly earnings in the second half of May. Urban Outfitters will report on May 19, Nordstrom on May 21, and while Capri hasn't yet announced a date, it typically reports in late May. 

John Rosevear 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

Capri Holdings Stock Quote
Capri Holdings
CPRI
$43.81 (1.15%) $0.50
Nordstrom Stock Quote
Nordstrom
JWN
$19.45 (3.98%) $0.74
Urban Outfitters Stock Quote
Urban Outfitters
URBN
$21.80 (0.76%) $0.17

*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
342%
 
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 10/05/2022.

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.