The upscale department store, based in Seattle, where there’s been among the highest number of COVID-19 cases, is suspending its quarterly cash dividend beginning in the second quarter of fiscal 2020, though the company underscored that it remains committed to paying dividends over the long term and will seek to resume payment when appropriate.
Nordstrom is also drawing down $800 million on its revolving line of credit, and in addition to its initial savings plan of $200 million to $250 million in fiscal 2020, is now targeting further reductions of more than $500 million in operating expenses, capital expenditures and working capital. This includes ongoing efforts to realign inventory to sales trends.
Furthermore, the company is suspending share repurchases.
“During this time of great uncertainty, we’re making decisions to best position Nordstrom for our employees, customers and shareholders,” said Erik Nordstrom, chief executive officer, Nordstrom Inc. “We are proactively taking steps to strengthen our financial flexibility to help us navigate through this unprecedented situation.”
In its statement Monday, Nordstrom it “continues to actively pursue further options to increase financial flexibility. While there is no immediate need to raise capital at the present time, the company intends to evaluate accessing the financing markets and will look to raise capital, when and if the company deems it prudent, to further strengthen its balance sheet.
Nordstrom exited fiscal 2019 with a healthy balance sheet, including $853 million of cash.
On March 16, Nordstrom temporarily shut down all of its stores, including Nordstrom full-line and Nordstrom Rack, Jeffrey, Trunk Club, Nordstrom Local and the clearance units.
Nordstrom continues to serve customers through its online business, which represented one-third of fiscal 2019 sales. The company said sales from its online business are helping to partially mitigate the impact from store closures.