Nordstrom sink or swim in the next six months

It looks like the next six months decide if Nordstrom continues as a going concern. I've already discussed that all of Nordstrom's cash-on-hand at the moment is borrowed, and that it is uncertain whether any additional debt will be offered in the future. So spend like a Swede, prudently.

The next challenge is Anniversary Sale – now posted with a banner on the web store landing page. It looks like it's on – August 19th, with an initial preview July 24, and staggered Early Access for tiers of the Nordy Club rewards program. So it's going to happen, anchored to a date – this is good news.

I'm continuing to see heavy discounting in email promotions from the Rack, things like decent dress shoes for $20, nice. There is other clearance going on, they're moving old inventory and raising cash now – also good news. Smart.

Now for some bad news. I'm going to post a link from someone who has a solid grasp of the problems we are facing, Charles Hugh Smith's blog:

http://charleshughsmith.blogspot.com/2020/06/forget-v-w-or-l-recovery-focus-on-n-p-b.html

The piece is thoughtful and worth reading, I agree with him how little slack there is in The System. But what caught my eye was his diagram of dominoes, particularly this one:

"Zombie corporations rush to borrow billions, but this only delays their insolvency."

Nordstrom obviously comes to mind with the revolver max-out and the special debt issue. The next six months – sure, let's include the holiday season – are a race for the company to demonstrate it is not a "zombie", that there is life in retail. Because if it fails, thanks to the built-in high costs of the baseline business – again, see the blog post – the remaining cash-on-hand is measured in quarters, not years.

The next six months are critical ... and the next six months after that ... and the next ... you may be on this treadmill for a while.

Also, could someone please post the updated org chart in Technology? just kidding, cheers

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One more thing.

If the 3GD fails in Hubei, Nordstrom is done, you may as well all go home.

What I'm saying is that it very well could, and it could happen without the long, drawn-out descent into craven asset-stripping and insolvency that we saw with retailers like SHLD and JCP.

JWN has borrowed money against their inventory at 875 bps. If they burn through this and the revolver, what is left? Who will lend them more? Against what collateral? Their good name? A title loan on Erik's car?

Geevy made the point to me once that it takes a lot to exhaust an old retailer, that someone can always be found to lend them money, at whatever terms. But this may not hold true in a real credit crisis, especially if Nordstrom has CRE liabilities hanging over their collective heads. It's not just that mall revenues are in secular decline, the 10-year leases are still out there, eating away the foundation of the business.

Nordstrom can indeed fail, and it can happen faster than most people imagine.

It's like all of the scummy companies survive for years on junk bonds and midnight restructurings and sketch financing, but when an honorable firm finally needs help, there is nothing left to have. Sorry, but muh credit crunch. JWN could possibly use an 11 to escape all of the leases, but this then means closing down the lion's share of the BAM business, and reforming into something else fast for one last go at it.

I suppose the same is true of people, when you finally lose your job and need UE insurance, oh heck, the state funds are exhausted. Meanwhile, all those years you worked, there were lowlife parasites living off the system, taking it and you for granted every single day.

Bleak understands institutions and people.

Hoping it sinks

Pretty soft holiday sales during boom times compared to the rest of retail, with missed targets for '18 and '19 doesn't give much hope for Covid times hitting a home run, but maybe. They are raising cash with the sales, but not making profits...

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Nordstrom sink or swim in the next six months

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