Nordstrom, the well-known department store operator, is taking steps to address the financial strain caused by the ongoing Covid-19 pandemic. In a letter penned by Jamie Nordstrom, the president of stores, the company announced that it will only be paying half of its occupancy costs for the remainder of 2020. This decision applies to both its full-price Nordstrom stores and its off-price Nordstrom Rack locations.

The letter also outlined additional details regarding the rental payments. Nordstrom stated that if store sales reach 90% of the previous year’s sales at a particular location, the company will adjust the rental payments accordingly. The company also made assurances to landlords that it will continue to meet its insurance coverage requirements, pay utilities, and uphold the lease agreement in maintaining the buildings.

This news comes shortly after Nordstrom confirmed its plans to reduce its workforce as part of a broader effort to cut down on overhead costs by 20%. Though the exact number of employees affected has not been disclosed, reports indicate that up to 25% of the workforce may face job cuts. It’s important to note that these figures do not include the associates who will lose their jobs due to the permanent closure of 16 Nordstrom locations.

The first quarter of 2020 proved to be quite challenging for Nordstrom, with a significant decline in net sales amounting to $2.03 billion, marking a 40% decrease compared to the previous year. The company also reported a net loss of $521 million, or $3.33 per diluted share. Despite positive sales growth up until February, the temporary store closures implemented in response to the pandemic greatly impacted these figures.

Despite the difficulties posed by the Covid-19 crisis, Nordstrom CEO Erik Nordstrom remains hopeful about the company’s future. He reassured stakeholders that Nordstrom has enough liquidity to continue implementing its strategy in the second quarter and beyond.

It’s worth mentioning that Nordstrom is not the only retailer facing rent payment issues due to the pandemic. Gap and Ross have also encountered legal action for their failure to fulfill lease obligations. The retail industry as a whole continues to grapple with the far-reaching consequences of the ongoing crisis, forcing companies to adopt various strategies in order to weather these challenging times.

Useful links:
1. Bloomberg: Nordstrom Asks Landlords for a Break on Rent
2. CNBC: Nordstrom asks landlords for break on rent amid coronavirus pandemic