Nordstrom Tripling Store Reopenings This Week
Company officials expressed confidence there is the financial wherewithal and flexibility to navigate through the pandemic.
By David Moin on May 20, 2020
Nordstrom Inc. will have 94 stores back in operation on Thursday, compared to 32 open for business as of Wednesday.
That’s the word from officials at the Seattle-based Nordstrom Inc., which held its “virtual” annual meeting for shareholders on Wednesday.
During the meeting, Pete Nordstrom, president and chief brand officer, said 32 stores were open for business as of Wednesday and that this week, the number of stores operating would triple.
He said Nordstrom is taking “a phased approach” to opening its stores based on what local and state governments permit and with the health and safety of employees, customers and communities as a priority.
Later, a spokeswoman explained that the actual count of stores opened would be 93 as of Thursday this week.
Twenty-three of the store reopenings are Nordstrom full-line department stores; the rest are Rack off-price units. The bulk of the openings are in Florida, Georgia, Ohio, Texas, Utah and Colorado. Nordstrom shut all of its stores in mid-March due to COVID-19.
Customers will notice changes in the store environments, Pete Nordstrom said. “Our store layouts have been adjusted to allow social distancing,” he said, adding that there are new protocols in fitting rooms, employees undergo health screenings, and the amount of cleaning in the stores has been increased, among other precautions being undertaken. The stores also provide face coverings for employees and customers, are limiting the number of customers and employees in stores, offer contactless curbside service and have changed the hours of operation.
Pete Nordstrom also said the alterations teams have sewn nearly one million masks for health-care workers.
During a brief Q&A segment, chief executive officer Erik Nordstrom was asked what it takes to navigate through the pandemic. His response was a strong balance sheet, noting the company entered 2020 with $850 million cash. “It sure seemed like a lot at the time,” he said.
It also takes “resonating with the customer,” he added. “It’s retail. The hard part is the uncertainty going forward. The pandemic has changed significantly all of our lives, particularly how we shop. We are accelerating all of the strategies that we have been investing in.”
That includes Nordstrom’s market strategy, which involves utilizing stores, both the full-line department stores and the Rack off-price stores, to fulfill online orders and provide pickup stations in stores and curbside, and opening Nordstrom Local service hubs. The idea is to bring inventory closer to where customers live and work, get products to customers faster by using stores as fulfillment centers, and connecting digital and physical experiences.
“Flexibility will serve us well, ” said the ceo. “Customers wanting options on how they want their merchandise delivered will continue.”
“We are really focused on our cash position and also our inventory position in the pandemic,” he said. “Not being tied up in a lot of on-order, and being able to respond to what the customer wants are more vital than ever.”
Asked by a shareholder how the online business has performed during the pandemic, Erik Nordstrom said the sale trends have been “fairly consistent with trends we had before. But I think it’s wrong to say our e-commerce has been the same. How customers are shopping and what they are interested in have changed quite a bit. It’s certainly a promotional environment. Our execution of e-commerce has undergone some changes,” due to the company’s ability to leverage store inventories to fulfill online orders. “Over 50 percent of our [nordstrom.com] online orders are being fulfilled in stores. Over 20 percent of Rack.com orders are fulfilled by Rack stores.” And in Canada, where Nordstrom recently launched e-commerce, 100 percent of those orders are filled by the Canada stores.
Pete Nordstrom was asked how relationships with vendors are being damaged by order cancellations, to which he responded, “We definitely took an assertive approach on canceling all of the orders we could. How is that impacting our relationships with brands? In at least all of the conversations I’ve had, there has been a really good sense of alignment in the situation we find ourselves in. A total sense of shared pain and burden. The conversations with brands have been constructive. We are thinking about how we can work together to go through these times.”
Brad Smith, Nordstrom’s chairman of the board, opened the meeting by saying that ending 2019 with “a solid financial position and healthy balance sheet helps us navigate through these times.”
The officials noted the measures undertaken by Nordstrom to navigate through the health crisis, including drawing down $800 million on its revolving line of credit, issuing $600 million in secured debt financing, suspending quarterly cash dividends and share repurchases, and executing reductions of more than $500 million in operating exp