Nordstrom Inc. is betting on its balance sheet to carry it through the coronavirus pandemic despite posting disappointing first-quarter financial results.
The department store chain today logged a net loss of $521 million, or a loss of $3.33 per share, compared with analysts’ expectations of a loss of 95 cents per share. Revenues for the three months ended May 2 fell to $2.12 billion from last year’s $3.44 billion, while market watchers anticipated sales of $2.41 billion.
In full-price, the company noted a 36% drop, while its off-price business netted a 45% decrease in sales. It attributed the declines to the COVID-19 health crisis, which forced the temporary closures of its stores since mid-March.
However, Nordstrom expressed faith in its balance sheet: According to the retailer, it has lowered inventory by more than 25% from the prior year and reduced its cash burn by more than 40% from March into April.
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What’s more, it has drawn down its $800 million revolver and said it’s on track to deliver cash savings of more than $500 million thanks to reductions in operating expenses, capital expenditures and changes to its working capital. It entered the fiscal year with cash of roughly $850 million and increased that position to about $1.4 billion by the end of the first quarter.
“We successfully strengthened our financial flexibility by increasing liquidity,” CEO Erik Nordstrom said in a statement. “We’re entering the second quarter in a position of strength, adding to our confidence that we have sufficient liquidity to successfully execute our strategy in 2020 and over the longer term.”
As of today, approximately 40% of Nordstrom’s fleet is now open. The company, which has employed a phased market-by-market approach to its store reopening plan, continues to serve customers online as well as offer contactless curbside pickup services at most of its full-line locations.
“It is clear we can seamlessly engage with customers through our Nordstrom and Nordstrom Rack brands, across stores and online,” added president and chief brand officer Pete Nordstrom. “We have a unique mix of assets, and the flexibility of our business model continues to serve us well.”