After reporting disappointing earnings last Thursday, Nordstrom CFO Michael Koppel announced that the retailer is looking to cut some $150 million in expenses, which includes $60 million it already planned to save through trimming its Seattle headquarter staff by some 400.
The company said it’s also taking a second look at its five-year-capital plan as part of the cutting effort.
Nordstrom last week reported Q1 profit of $46 million, down 64% from $128 million year over year.
Nordstrom last week joined a handful of apparel retailers that also reported dismal earnings, including Kohl's, Macy's, and Gap, highlighting the troubles these companies are facing as malls see less foot traffic and competition from fast-fashion and off-price retailers increases.
There are increasing signs that apparel is not the winning category it once was, and that retailers will have to focus on clothing that does sell, as well as other categories. Last week Nordstrom said it was doing just that, saying that collaborations with Madewell, Topshop and Brandy Melville are doing well but that it’s cutting less profitable items.
“In addition to inventory management, expense rigor is a key component of our plan,” Koppel said during an earnings call Thursday. “We are also executing on a number of initiatives to increase efficiencies across our supply chain and marketing functions.”
It’s also clear that Nordstrom, long a big player in e-commerce for a department store, is feeling the sting of low margins online, too. Nordstrom is also doing well, even with apparel, but those sales are less profitable due to the higher costs of e-commerce fulfillment. The retailer, which offers free shipping as well as free returns on all orders, is looking at ways to trim costs by consolidating more items, reining in supply chain costs and removing poorly selling merchandise.
A plan to expand its loyalty program to allow more participation even by those without the retailer’s credit card are among other moves that could help stabilize the retailer.