Nordstrom expects to lay off about 350 to 400 people, with the majority of the cuts coming from corporate headquarters in Seattle.

Share story

Beset by fierce online competition, a lackluster retail climate, the costs of rapid expansion and sagging profits of late, Nordstrom on Monday said it expects to lay off 350 to 400 people in a cost-cutting measure aimed at becoming more efficient.

The majority of the cuts will come from its corporate headquarters in Seattle, where departments such as marketing, finance, legal and merchandising are all looking at possible cutbacks.

Sales-floor positions are not being considered for cuts, the fashion retailer said.

Nordstrom will first look at eliminating open positions. It then will make job cuts primarily in its corporate center and regional support teams, the company said.

Most Read Business Stories

Sale! Get 90% off digital access.

The 400 positions represent nearly 6 percent of the company’s 7,000 employees who work for corporate divisions (not necessarily in Seattle). In total, the company employs more than 70,000 people.

The cuts should be completed by July and are expected to save the company about $60 million.

“We will never change our commitment to serving customers, but recognize how they want to be served has been changing at an increasingly rapid pace,” Blake Nordstrom, company co-president, said in a statement. “Meeting our customers’ expectations means we must continually evolve with them. We see opportunities to create a more efficient and agile organization that ensures we’re best positioned to achieve our goals.”

The planned cuts come in the wake of a layoff of 120 tech staffers in March, and the cutting of 14 manager positions before that.

It’s a big shift in fortunes for the Seattle retailer that had been a Wall Street darling, in part because it had expanded from its full-line department stores with a successful online business and a fast-growing off-price division, Nordstrom Rack.

The warning signs came after a dismal third quarter last year, followed by a fourth quarter — including the all-important holiday shopping season — that failed to live up to analysts’ expectations.

Sales were weak at its full-line stores, which make up the bulk of its retail business. Even its Nordstrom Rack business saw comparable sales — sales at stores open at least a year — fall in the fourth quarter.

After Nordstrom cut its outlook for the year in November, shares plunged as much as 20 percent. Its shares, which closed at $52.33 Monday and remained there in after-hours trading following the cutback news, are down 32 percent from this time last year.

Blake Nordstrom had alluded to changes to come in February, when he said during a conference call with investors that the current retail environment “requires us to pivot even more as we remain focused on improving profitability. In response, we are making adjustments to reduce expense and capital spending in 2016 and in the coming years.”

In recent years, the company had spent heavily to build its e-commerce business, expand its brick-and-mortar stores into Canada, and grow the number of Nordstrom Rack stores.

In its five-year capital plan running through 2019, it included a five-year estimate of $1.1 billion to open the Manhattan and Canada stores.

2015 was a “peak investment year,” Blake Nordstrom said in the February conference call.

More recently, the company has been cutting back, with its most recent $4 billion five-year capital-expenditure plan representing a cut of $300 million in store investments relative to last year’s plan.

Its e-commerce business, which now represents 20 percent of the company’s sales, up from 8 percent five years ago, also faced cuts.

As it built out that infrastructure, expenses in recent years had grown faster than sales. Company executives said earlier this year they would focus online technology efforts on fewer, more meaningful projects, with the goal of wringing more profit out of the online operation while cutting expenses.

“Nordstrom has done everything it can to mitigate online competition,” said Burt Flickinger III, retail analyst with Strategic Research Group. “But it’s so pervasive and ubiquitous on a 24-hour basis worldwide.”

The company’s move into Canada, meanwhile, “coincided with the worst oil-sector crash in nearly 25 years,” Flickinger said. “Nordstrom paid at the top of the market for leases and costs to expand its Canadian stores and paid top of the market for its New York stores. So it has a higher cost curve in the years ahead because of the Canadian and New York expansions.”

The company’s situation is not helped by a weak retail market.

Retail sales fell 0.3 percent in March, though economists had forecast sales inching up 0.1 percent, according to Reuters.

In recent years, stores including Target and Wal-Mart have announced layoffs. Macy’s in January said it would lay off more than 4,000 employees and close 36 stores.

“The department-store sector is facing the worst of the retail ice age,” Flickinger said. “In the first quarter of this year, shopping malls have seen customer counts decline 7 to 8 percent.”

General consumer spending on discretionary items has been weak, said Bridget Weishaar, equity analyst for Morningstar.

“With rising health-care costs, rents, education costs, there’s less money for consumers to spend,” she said.

Plus, in her view, there have not been any hot new fashion trends to drive must-have buying frenzies.

“It’s been yoga pants and athleisure for a couple of years now. And everyone has those things in their closets already,” she said. “Until there’s a new trend, a reason for people to buy new apparel, it’s not exciting and not necessary.”