Upscale store chain to cut jobs

Nordstrom to reduce work hours in wake of weak sales

September 29, 2001|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Upscale retailer Nordstrom Inc., known for outstanding customer service, is cutting jobs and trimming work hours in its department stores across the country in response to weak sales that have worsened since the terrorist attacks on Sept. 11.

Nordstrom executives would not disclose yesterday how many jobs will be eliminated, but said staffing is being reviewed at all department stores. The Seattle-based retailer has four stores in Maryland - in Towson, Columbia, Annapolis and Gaithersburg, each of which employs between 150 and 200 workers.

Because of the slowdown in consumer spending, Nordstrom also announced an "unprecedented" 10-day sale, which started yesterday, to clear men's, women's and children's fall merchandise. Since it began selling apparel in 1963, the retailer has run sales only three times a year.

"We are responding to the current economic climate," said Danielle Deabler, a spokeswoman for the chain. "We're adjusting to the consumer demand right now."

Nordstrom's sales weakened this year as they have for most retailers, as consumers, worried about the economy, layoffs and the stock market, have spent less. Last month, sales at Nordstrom stores open at least a year fell by 2.8 percent, the company reported. This year through August, same-store sales had dipped by 1.5 percent.

"Results have been terribly disappointing, even before Sept. 11," said Howard A. Rosencrans, who is director of research and a senior securities analyst for HD Brous & Co. in Great Neck, N.Y.

Since the attacks, customer traffic has dropped more, said Deabler, who could not release specific sales figures for the past few weeks. The chain will report September sales Oct. 8.

Analysts said it is likely that the slowdown at Nordstrom has been similar to that of department store retailers Federated Department Stores Inc., which said sales have dropped 20 percent since Sept. 11, and Saks Inc., which operates Saks Fifth Avenue and other stores, where sales have fallen by 12 to 15 percent.

Markdowns of 33% to 60%

Through its newly added 10-day sale, Nordstrom said it hopes to generate sales and clear out inventory with markdowns of 33 percent to 60 percent. "We hope the [sale] will give customers a reason to shop during the difficult times," Blake Nordstrom, president of Nordstrom, said in a statement.

Analysts yesterday said Nordstrom's job cuts came as no surprise.

"It's something they need to do with the weak sales; they can't leverage their expenses," said Lori Wilking, a securities analyst with H&R Block Financial Advisors in Detroit. "They had never wanted to cut back on wages, but now they've got to do something."

The cutbacks will not likely damage Nordstrom's longtime reputation as a retailer that goes to great lengths for customers, Wilking said.

"They're smart enough merchants to not make it seem noticeable," she said. "They would be cutting back shifts where the store isn't that busy. I don't think it will be a noticeable change."

`Extremely vulnerable'

But as a more upscale retailer dependant on the sale of apparel, Nordstrom is likely to feel the effects of an economic downturn more acutely than other retailers, such as discounters, said Rosencrans.

"They're extremely vulnerable, and their little niche is increasingly evaporating," as other retailers have tried to increase customer service, he said. Also, "I have not found their price points to be particularly reasonable."

By cutting jobs, Nordstrom might risk alienating customers who count on high levels of service, he said. "I think you're going to potentially risk some of the service if you cut back," he said.

Even before the attacks, Nordstrom had struggled to keep its inventory in balance, hurt especially by slow sales of tailored men's apparel as fashions have become more casual, Wilking said.

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