Retail

Macy's, Nordstrom Face Huge Losses Due to Urban Unrest

After George Floyd was killed in Minneapolis, a number of cities have been hit with protests, some of which have turned violent. Retail locations in these cities face damage. Among those with downtown locations, Macy’s Inc. (NYSE: M) and Nordstrom Inc. (NYSE: JWN) are particularly vulnerable.

In a series of actions, retailers have been put into impossible circumstances. These include a Nordstrom location in Los Angeles that has badly damaged. Target Corp. (NYSE: TGT) has closed or shortened hours at about 200 locations. Apple Inc. (NASDAQ: AAPL) said it would close some of its stores on Sunday, and most have not reopened. Macy’s flagship store in New York’s Herald Square was attacked.

Certainly, a number of retailers will have their sales decline again in many locations, after they already have been ravaged financially by the pandemic. The New York Times reports that there have been protests in 140 American cities. Not all have turned violent.

Nordstrom Rack has a location near Union Square, which has been particularly hard hit by violent protests. It has a store on Michigan Avenue in Chicago. Macy’s has a store there as well. A look at the store map locations of the two retailers shows how much risk they have in a number of cities.

Macy’s was already on the ropes when it announced earnings for its most recent quarter. Sales dropped from $5.5 billion in the same period a year ago to as low as $3.0 billion, according to its estimates. Its loss could be as high as $1.1 billion, compared to a $203 million profit last year. Macy’s announced actions to buttress its balance sheet. However, obviously, its actions can only keep it afloat for so long.

Nordstrom said first-quarter revenue fell to $2.0 billion from $3.3 billion the year before. The company posted a net loss of $521 million, compared to a profit of $37 million in the year-ago period. Nordstrom also told investors about how its balance sheet would let it ride out the financial storm from the pandemic. The plans did not anticipate how civil unrest might hurt results further.

Each retailer has a substantial online presence. In neither case is it robust enough to offset another battering in the revenue from its brick-and-mortar locations. No one knows how long the civil unrest in U.S. cities will continue. Each day erodes the prospects for Macy’s and Nordstrom.