American luxury department store chain, Nordstrom, Inc. has emphasised on having “sufficient liquidity” to execute its strategy in 2020 and beyond. The company has recorded positive sales growth in February 2020, continuing the momentum of its $5 billion e-commerce business, from the second half of 2019.
“We successfully strengthened our financial flexibility by increasing liquidity, lowering inventory by more than 25% from last year and significantly reducing our cash burn by more than 40% from March into April,” said Erik Nordstrom, CEO, Nordstrom, Inc through a statement. “We’re entering the second quarter in a position of strength, adding to our confidence that we have sufficient liquidity to successfully execute our strategy in 2020 and over the longer term.”
Nordstrom had to temporarily close stores on March 17 due to COVID-19, which had a material impact on financial results as brick-and-mortar made up two-thirds of its business in 2019. For the first quarter ended May 2, 2020, the company’s net sales decreased 40% from last year. However, Nordstrom will focus on strengthening its financial flexibility through inventory and overhead cost reductions, while positioning the business for the long-term by accelerating its strategic initiatives.
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Nordstrom is focused on optimising the mix of its physical and digital assets through the closures of 16 full-line stores and 3 Jeffrey specialty boutiques in addition to restructuring its regional and corporate support organisation to achieve greater agility.
“It is clear we can seamlessly engage with customers through our Nordstrom and Nordstrom Rack brands, across stores and online. We have a unique mix of assets, and the flexibility of our business model continues to serve us well,” added Pete Nordstrom, president and chief brand officer, Nordstrom, Inc through a statement. “In 2019, our off-price and e-commerce businesses accounted for nearly 60% of sales. As we anticipate an acceleration of these longer-term customer trends, we’re taking proactive steps to move faster in executing our strategic plans.”
Meanwhile, Nordstrom is applying a phased market-by-market approach, as it began reopening stores in the US in early May, with approximately 40% of its fleet now open. Nordstrom continues to serve customers online and provides contactless curb side pickup services in most full-line stores. The company is also utilising fulfillment capabilities at full-line and Nordstrom Rack stores to leverage inventory in its markets and bring greater selection and faster delivery to customers.