SEATTLE -- Nordstrom insists it is well-positioned moving forward despite reporting a 40% drop in first-quarter sales and a loss of more than half a billion dollars in a coronavirus walloping far worse than analysts expected.
CEO Erik Nordstrom told analysts in a conference call after results were released Thursday that the company's inventory reductions and increased online emphasis leave it with enough liquidity and flexibility as the nation begins to reopen. The company this month reopened nearly 40% of its stores -- mostly in smaller markets -- and implemented curbside pickup at most full-line locations after shuttering them in mid-March due to pandemic concerns.
"We believe these unprecedented times are only accelerating the changes that were already well underway with our customers, including how they want to engage with digital and physical experiences,'' Nordstrom said. "The flexibility of our business model allows us to stay ahead of these changes as we serve customers through our two distinct brands, Nordstrom and Nordstrom Rack, across stores and online.''
The Seattle-based luxury retailer is coming off a brutal lockdown stretch, reporting a loss of $521 million, or $3.33 a share -- roughly three times worse than what many analysts expected -- on revenue that declined to $2.12 billion for the three-month period ending May 2.
A poll of 21 Wall Street analysts by S&P Capital IQ showed they expected losses of $165.28 million, or $1.09 a share, on revenue of $2.27 billion. During the comparable period a year ago, Nordstrom posted a $37 million profit on revenue of $2.27 billion.
The company had felt the strain of missed sales targets even before the pandemic struck as it transitions from a brick-and-mortar business toward more of an online retailer.
Nordstrom said e-commerce and sales of "off-price'' luxury items for discounted amounts at stores like Nordstrom Rack accounted for 60% of the company's business last year. He said the company plans to expand that business moving forward, having announced this month the permanent closure of 16 of its 116 full-line stores and restructuring of operations to save $150 million and enhance cash flow.
Anne Bramman, the company's chief financial officer, told analysts the company's cash reserves improved from $854 million to $1.4 billion by quarter's end and that it reduced the rate at which it burns through cash by 40% between March and April. Part of that was achieved by the company in March announcing it was suspending dividends and share repurchases.
"As we continue to navigate through this uncertainty, we're taking a cautious and thorough approach in planning our business,'' Bramman said, adding she hopes all stores reopen by the end of June, including in California within a couple of weeks, then New York. "Our scenario plans and stress testing contemplate a slow recovery and a continued promotional environment.''
Nordstrom shares have dropped 56% since the start of the year while the S&P 500 index is down only 6%. The stock fell 7.7% on Thursday, before the quarterly results were announced.
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