Nordstrom Inc. plans to permanently close 16 full-line stores and announced other additional actions to increase flexibility and agility in response to COVID-19. The Seattle-based chain also said it will make changes to how its stores function in a “market-by-market” approach and will move its big Anniversary Sale from July to August.

“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 Erik Nordstrom, chief executive officer of Nordstrom, Inc. “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 centers to get products to customers faster, and connecting digital and physical experiences with services like curbside pickup and returns.”

The company will incur non-cash impairment charges associated with the closing of 16 full-line stores as part of an acceleration of its response to COVID-19 to further position the retailer for the long term. The stores to be shuttered were not identified in the company’s statement. Nordstrom had selectively closed some full-line stores in recent years. In January 2019, it had 121.

Nordstrom is also restructuring its regions, support roles and corporate organization for greater speed and flexibility. This restructuring is expected to result in expense savings of approximately $150 million, or 30 percent of the company’s previously announced plans for net cash reductions of more than $500 million in operating expenses, capital expenditures and working capital. These actions, combined with its initial savings plan of $200 to $250 million, represent a reduction in non-occupancy related overhead expenses of approximately 20 percent.

Nordstrom said its stores continue to be a core part of the business. With stores being temporarily closed since March 17, Nordstrom plans to reopen stores in a phased, market-by-market approach where allowed by local authorities and with the health and safety of employees, customers and communities as a priority. Given this phased approach, the company is shifting its Anniversary Sale event from July into August.

As it re-opens stores, Nordstrom is making the following updates to help keep customers and employees safe and healthy:

  • Conducting health screenings for employees;
  • Providing face coverings for employees and customers;
  • Taking steps to allow for social distancing of six feet or more, including limiting the number of customers and employees in the store;
  • Increasing cleaning and sanitization;
  • Modifying the fitting room experience;
  • Continuing to offer contactless curbside services at full-line stores;
  • Altering hours of operation;
  • Pausing or adapting high-touch services and customer events; and
  • Keeping tried on or returned merchandise off the salesfloor for a period of time.

Throughout the crisis, Nordstrom continues serving customers through its scaled e-commerce business, representing one-third of 2019 sales, including a robust off-price online business that exceeds $1 billion. While stores are temporarily closed, the company said it is generating solid online traffic and conversion and clearing excess inventory through increased marketing and promotional efforts.

Nordstrom said its store fulfillment capabilities are an important way to leverage inventory and bring greater selection to customers in its markets. Beginning in mid-April, the company added these capabilities at Nordstrom Rack stores, which enabled store fulfillment throughout Nordstrom’s entire fleet of stores. More than half of Nordstrom.com orders are currently fulfilled from full-line stores, and 25 percent of Nordstromrack.com and HauteLook.com orders are now 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 there.

The company is on track to deliver on its savings plans and continues to pursue further efficiencies across the organization while investing in technology and supply chain capabilities.

Nordstrom operates 378 stores in 40 states, including 116 full-line stores in the United States, Canada and Puerto Rico; 247 Nordstrom Rack stores; three Jeffrey boutiques; two clearance stores; five Trunk Club clubhouses; and five Nordstrom Local service hubs.

Photo courtesy Nordstrom