Nordstrom's net profits dropped 40 percent in the first three months this year, the company bared on Thursday, but the department store network is optimistic that it can operate through the global crisis given its solid financial position, unlike some of its struggling counterparts.
During the recession, Department store owners JC Penney, Neiman Marcus, and Stage Stores have all applied for bankruptcy protection. Macy's is unloading $1.3 billion in fresh debt to ramp up liquidity.
Before the pandemic, this group of retailers was already seeing a small volume of customers frequenting malls and declining apparel sales. Then, COVID-19 reared its ugly head.
All in all, Nordstrom's sales plunged around 40 percent from the year-ago to $2.03 billion for the quarter ending May 2. Sales collapsed 35 percent in the retailer's full-price stores and 44 percent among off-price branches. Nordstrom shut its chains starting March 17 as authorities started to implement social distancing measures aimed at curbing the spread of the disease, including those that called for closing down non-essential businesses.
Wall Street analysts estimated Nordstrom to rake in $2.39 billion in revenue for its latest quarter, FactSet reported. The Seattle-headquartered retail firm posted a loss of $520 million, or $3.33 per share, down from $37 million sales, or 23 cents per share, from the previous period.
"We are entering a second quarter in a position of strength, which adds to our confidence that we have sufficient liquidity to execute our plans for 2020 and over the longer term," Nordstrom chief executive officer Erik Nordstrom disclosed in a media release, as reported by Kelly Tyko in USA Today.
The group stated that around 40 percent of its department store chains have reopened for business, after being temporarily shut down in March. Nordstrom stressed that it expects its full store fleet to be back in operation by end of June, including the retailer's massive new flagship store in New York.
Officials recently said that they would permanently close down 16 of the firm's 116 full-line stores due to the negative effects of the virus. During its presentation Thursday, the company listed the locations, which include three closing Jeffrey specialty shops.
Neil Saunders, managing chief of retail consultancy agency Global Data, stated that the store closings were a fairly dramatic move since the company represents 14 percent of total stores. Saunders hailed the decision and said that it was overdue.
As of Thursday's final bell, Nordstrom shares retreated over 55 percent, for the year. The company has a market cap of $2.8 billion.
