Nordstrom Is Laying Off Thousands of Workers
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Nordstrom is making steep cuts to its workforce as it continues to grapple with the coronavirus pandemic’s outsized impact on its business.
In a statement to FN, the Seattle-based retailer wrote that it was “making adjustments” in response to shifting consumer behaviors amid the current health crisis. Although it did not specify the number of employees that would be affected, a recent report from The Seattle Times — which cited an unnamed veteran corporate worker who had just been laid off — suggested that the chain had cut 6,000 jobs across the country last month.
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“We’re realigning and reducing our workforce to support our market strategy, including in our corporate support teams,” a spokesperson said. “These types of decisions are never easy, because we realize the impact it has on our people. We’re committed to taking care of them as best we can during this transition.”
According to the company, every eligible employee will receive a severance package that includes benefits through the government’s Consolidated Omnibus Budget Reconciliation Act (or COBRA) and outplacement support.
In an effort to reduce expenses and maintain liquidity, Nordstrom has recently taken several steps: It has drawn down its $800 million revolver, as well as announced plans to permanently shutter 16 of its full-time stores and three Jeffrey boutiques. It has also reduced the salaries of its top executives, while CEO Erik Nordstrom, president Pete Nordstrom and the board of directors are forgoing their pay for a portion of the year.
Nordstrom’s first-quarter report in late May showed a net loss of $521 million, or a loss of $3.33 per share, compared with analysts’ expectations of a loss of 95 cents per share. Revenues for the three months ended May 2 fell to $2.12 billion from last year’s $3.44 billion, while market watchers anticipated sales of $2.41 billion.
At the time, the department store said it was on track to deliver cash savings of more than $500 million thanks to reductions in operating expenses, capital expenditures and changes to its working capital. These savings represent a reduction in non-occupancy-related overhead charges of of roughly 20% on an annualized basis.
“COVID-19 has had a very real impact on Nordstrom, accelerating the importance of our market strategy and capabilities we’ve invested in for years,” the spokesperson told FN. “Our new operating model helps us serve customers across our business as one company, while enabling us to be more agile and flexible. We’ll continue to invest in critical capabilities across technology, data analytics and supply chain to deliver for our customers.”
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