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Why Nordstrom Stock Fell on Tuesday

By John Rosevear – May 12, 2020 at 4:26PM

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Restarting retail won't be a smooth process.

What happened

Shares of upscale department-store operator Nordstrom (JWN 1.89%) closed lower on Tuesday, likely on a growing consensus that the reopening of the U.S. economy will be a gradual, up-and-down process.

Nordstrom's shares ended the session at $16.16, down 5.6% from Monday's closing price.

So what

Nordstrom last updated investors on May 6, when it said that it will permanently close 16 of its full-price department stores amid a larger restructuring plan that aims to save about $150 million per year. 

"We've been investing in our digital and physical capabilities to keep pace with rapidly changing customer expectations," CEO Erik Nordstrom said. "The impact of COVID-19 is only accelerating the importance of these capabilities in serving customers." 

The entrance to Nordstrom's store on West 57th Street in New York.

Image source: Nordstrom.

Nordstrom said that while its physical stores have been closed, it has used its stores' inventories to fulfill online sales. More than half of orders placed via its flagship full-price storefront are being fulfilled from closed stores, while about a quarter of orders via its off-price online storefronts are being fulfilled from shuttered Nordstrom Rack stores.

Nordstrom plans to reopen its stores in phases over the next couple of months, as local regulations and conditions allow. It said that it will postpone its annual anniversary sale event from July to August, when it expects all of its full-price stores to be open. 

Now what

Consumer-discretionary investors won't have to wait long for an update on Nordstrom's store-reopening plan. The company is expected to report its fiscal first-quarter earnings on May 21.

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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Nordstrom, Inc. Stock Quote
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