Dive Brief:
- Nordstrom plans to cut 222 employees at a distribution center in Cedar Rapids, Iowa, according to a WARN notice filed with the state.
- The layoffs will come next month, on Oct. 18., according to the notice. Nordstrom did not immediately respond to a request for comment.
- The distribution center is one of two supply chain facilities that Nordstrom operates in Iowa, which together amounts to 1.5 million square feet of space and are the retailer’s only facilities in the Midwest, according to filings.
Dive Insight:
A Nordstrom spokesperson told Footwear News that the cuts come as Nordstrom shifts some product volume to other facilities.
Pete Nordstrom, the retailer’s president and chief brand officer, told analysts in August that Nordstrom was working to improve the consistency and predictability of unit flow through its supply chain network as well as increase productivity in its distribution and fulfillment centers.
The company is also prioritizing accelerating delivery speed and expanding the market-level selection for in-store shopping as well as same-day and next-day pickup, Nordstrom said. Anne Bramman, chief financial officer, also noted on the analyst call that the company has shortened the number of days to deliver to customers from its supply chain.
The supply chain work is part of Nordstrom’s “Closer to You” initiative, an effort to expand next-day order pickup capabilities to more stores and more markets.
In a note Friday, Cowen analysts pointed out that 40% of Nordstrom’s customers are on the West Coast while many of its distribution centers historically were built in Iowa and Pennsylvania.
In the note, which followed a conversation with Nordstrom management, the Cowen analysts said that Nordstrom is working to optimize a California facility to integrate fulfillment for its full-line and Rack banners. The retailer is also creating a dedicated Rack team in its supply chain to sort and tag Rack inventory to smooth flow and boost productivity.
Executives have also referenced optimization work in its supply chain as an offset to increases in labor and fulfillment costs.
The company has made other recent moves to bolster its supply chain. In March, Nordstrom announced the hires of three veterans of the off-price world, including Stacy Lippa, who has worked at Five Below and Target, as its new vice president for supply chain at Nordstrom’s Rack banner.
While Nordstrom has posted relatively strong numbers for its recent quarter, it lowered its expectations for the year as consumers pull back on discretionary purchases. Inflation has hit the retailer’s Rack customers particularly hard, while its full-line stories put in a solid performance in the second quarter, with sales up more than 14%.
As it heads into the back half of a volatile year, Nordstrom has reduced its sales plans and marked down inventory to clear out underperforming merchandise.
