Nordstrom to permanently close 16 full-line stores

By Beth Wright | 6 May 2020

Upscale US department store operator Nordstrom is to shutter 16 full-line stores amid a restructure designed to better position the business as it navigates the Covid-19 pandemic.

The retailer currently operates 378 stores in 40 states, including 116 full-line stores in the United States, Canada, and Puerto Rico, and will incur non-cash impairment charges associated with the closures.

It has also outlined a restructuring of its regions, support roles and corporate organisation for "greater speed and flexibility", which it expects to result in expense savings of about $150m, or 30% of its plans for net cash reductions of more than $500m in operating expenses, capital expenditures and working capital.

Despite the impending closures, Nordstorm said "stores continue to be a core part of the business". As with many other retailers, Nordstrom's stores have been temporarily closed since 17 March amid a nationwide lockdown to stem the spread of the coronavirus.

The company plans to reopen its locations in a phased, market-by-market approach where allowed by local authorities and is shifting its anniversary sale event from July into August.

It noted while stores are temporarily closed, it is generating "solid" online traffic and conversion and is clearing excess inventory through increased marketing and promotional efforts.

"We've been investing in our digital and physical capabilities to keep pace with rapidly changing customer expectations. The impact of Covid-19 is only accelerating the importance of these capabilities in serving customers," said CEO Erik Nordstrom. "More than ever, we need to work with flexibility and speed. Our market strategy helps with both, bringing inventory closer to where customers live and work, allowing us to use our stores as fulfillment centres to get products to customers faster, and connecting digital and physical experiences with services like curbside pickup and returns."

Neil Saunders, managing director of GlobalData Retail, notes closing 16 of its full-line stores – around 14% of the total store base – is a "significant move" by Nordstrom.

"However, in our view, it is not so much of a step back from physical retail as it is an optimisation of the store portfolio," he adds.

"We have long since stated that Nordstrom has too many department stores that are in sub-optimal locations. Since those shops were originally opened, the demographics in the trade areas and the competitive mix have changed for the worse. The result is that Nordstrom has been left exposed."