Nordstrom Inc, a high-end department store chain headquartered in Seattle, has faced a significant setback with a nearly 40% decrease in quarterly sales due to the Covid-19 pandemic leading to forced store closures. Despite this challenge, the company managed to see a 5% increase in online sales, reaching $1.1 billion in the first quarter ending on May 2nd.
Similar to many other retailers, the pandemic has posed unprecedented challenges for Nordstrom, with major chains like J.C. Penney, J.Crew, Neiman Marcus, and Stage Stores filing for bankruptcy. In response, Nordstrom has taken proactive steps to mitigate the impact of the outbreak, including reducing inventory, cutting costs, and refining their marketing strategies.
CEO Erik Nordstrom highlighted the company’s initiatives to enhance financial flexibility, such as increasing liquidity, reducing inventory by over 25% compared to the previous year, and decreasing cash burn by more than 40% from March to April. Despite the current circumstances, he remains confident in Nordstrom’s positioning moving into the second quarter.
Although about 40% of Nordstrom’s stores have reopened, primarily in smaller markets, the company aims to have all of its locations operational by the end of June, including flagship stores in major markets like California and New York. The total net sales for the first quarter saw a drop to $2.03 billion from $3.35 billion the previous year, with a reported net loss of $521 million, or $3.33 per share, partly attributed to store closures and restructuring.
As a response to the current environment, Nordstrom recently announced the closure of 16 out of its 116 full-line U.S. stores. On a brighter note, Dollar General Corp and Dollar Tree Inc. surpassed profit estimates, underscoring the potential for increased demand for affordable groceries and household essentials amid escalating unemployment rates and the looming threat of a deep recession.
For merchants seeking a more in-depth understanding of adapting to the challenges posed by the pandemic, the National Retail Federation provides valuable resources and insights here. Additionally, for those interested in exploring strategies for improving online sales and digital marketing, Shopify offers innovative solutions here.
