Things are getting worse for the American economy, despite the best efforts of the Federal Reserve. Whereas the Trump administration has promised to put forth an economic stimulus package to help the country, setbacks in the Senate have pushed back these plans for the time being. Until then, major companies across the country are undergoing extreme measures to get a handle of their financial situations, including suspending dividends. Nordstrom (NYSE:JWN) announced on Monday that the company would be halting all shareholder dividends as well as shutting down hundreds of stores across the country.
In an official statement, the retail giant stated that it would be suspending its dividend and shutting down around 360 stores in North America for the next two weeks, with extending closures being a possibility as well, depending on how the coronavirus pandemic plays out. Additionally, Nordstrom said that it would be taking on an extra $800 million credit loan to help keeps its financings in order.
“During this time of great uncertainty, we’re making decisions to best position Nordstrom for our employees, customers and shareholders. We are proactively taking steps to strengthen our financial flexibility to help us navigate through this unprecedented situation,” said Nordstrom’s CEO Erik Nordstrom. Although the company emphasized that it’s committed to paying its dividend to shareholders in the long term, Nordstrom didn’t specify when it plans to resume payments in the future.
Other companies have made similar announcements over the past week. Airplane manufacturer Boeing warned investors that it would be halting its dividend in lieu of financial difficulties while its CEO decides to give up all executive pay for the year. Macy’s has also announced that it would be suspending its dividend while withdrawing its sales and earnings targets for 2020. Most other retail companies have followed suit to some extent or another. Abercrombie & Fitch, L Brands, J.C. Penney, as well as shopping mall operators across the country have announced that they are pulling back their revenue targets for 2020.
Shares of Nordstrom are down around 12.5% in response to the news, extending what’s already been an extensive 60%-plus loss since the beginning of this year. At the moment, the total number of coronavirus cases around the world has surpassed 380,000, with the total number in the U.S. growing past 46,000. While both the Federal Reserve as well as the Trump administration are doing their best to support the economy in one way or another, things aren’t looking that great for the markets at this point. Some economists have warned that unemployment could spike to 20% or more if severe actions aren’t taken soon.
Nordstrom Company Profile
Nordstrom is a fashion retailer that operates approximately 140 department stores in the U.S. and Canada and approximately 240 outlet stores under the names Nordstrom Rack and Last Chance. The company also operates e-commerce sites and a personalized styling service called Trunk Club. Nordstrom’s largest merchandise categories are women’s apparel (32% of sales) and shoes (24% of sales). Nordstrom, which traces its history to a shoe store opened in Seattle in 1901, continues to be partially owned and managed by members of the Nordstrom family. – Warrior Trading News