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May 4, 2023 : Nordstrom, the luxury department store chain, has announced two changes to its business strategy to improve its results and deliver long-term value to shareholders. Firstly, the company will close its six Canadian department stores and seven Canadian Rack stores by late June due to poor performance in the market. This move will enable Nordstrom to focus on its core U.S. business. The closure is expected to reduce sales by around $400 million but generate a $35 million improvement in pre-tax earnings. However, the closure will lead to the loss of around 2,500 jobs and closing costs are estimated at $300 million to $350 million.
In addition to this, Nordstrom is cutting its technology operation, but it has also hired a new technology officer, Jason Morris, who started his new role on Monday. The reduction of tech workers is partially due to the closure of the Canadian operation and not a reflection of cutting back on the development of new technologies. Morris brings 25 years of experience in technology for the retail industry and will lead Nordstrom’s tech team in developing key programs that improve overall company efficiencies. His first task is to oversee the rollout of a radio-frequency identification system that will be company-wide later this year, making it easier to keep tabs on merchandise and help rapidly reordering popular products, thereby improving inventory management and reducing operating expenses.
Nordstrom’s management believes it must invest in technology to ensure future success, with improvements in inventory productivity and supply chain optimization among its top 2023 priorities. The rollout of the new radio frequency identification system is an important step towards achieving these goals. Although these changes may seem drastic, management is confident they will deliver long-term value to shareholders while ensuring the company’s future success.
