Nordstrom has decided to permanently close 16 of its full-line stores, lowering the tally to 100 in the U.S., Canada and Puerto Rico, and its three Jeffrey stores as it restructures to respond to the impact of the Covid-19 pandemic. The American luxury retailer will incur non-cash impairment charges associated with the closures. It is scheduled to report its first-quarter results on May 28.
Nordstrom is restructuring to achieve “greater speed and flexibility.” It expects savings of some $150 million from the reorganization, or 30 percent of a larger program to reduce costs by more than $500 million by acting on operating expenses, capital expenditures and working capital. The cost savings come on top of an initial savings plan of $200 to $250 million for the 2020 fiscal year. The overall savings represent a 20 percent reduction in non-occupancy related overhead expenses.
In the meantime, the retailer has been reopening in phases stores temporatily closed since March 17 and has shifted its Anniversary Sale event from July to August. At the end of last week, 94 locations had reopened. At the beginning of February, the retailer had 380 locations.
Jeffrey Kalinsky, who founded the luxury stores that bear his first name and is the designer fashion director at Nordstrom, has decided to retire from the company. Kalinsky joined Nordstrom in 2005, after having sold his business to the retailer, as director of designer merchandising and has served as executive vice president of designer merchandising and vice president, designer fashion director.
During the Covid-19 crisis, Nordstrom has served clients through its e-commerce business, which represented one-third of last year’s sales, including an off-price online business that exceeded $1 billion. In the full year end on Feb. 1, 2020, the retailer generated overall sales of $15,132 million.
While the stores were closed, it generated solid online traffic and conversion and cleared excess inventory through increased marketing and promotional efforts. From mid-April, the company added fulfillment capabilities at Nordstrom Rack stores, which enabled store fulfillment throughout its fleet of stores. More than half of Nordstrom.com are currently fulfilled from full-line stores, and 25 percent of Nordstromrack.com and HauteLook.com orders are fulfilled by Nordstrom Rack stores. Nordstrom recently launched its dedicated e-commerce site to serve customers in Canada, with all online sales fulfilled from the six full-line stores in the country