Nordstrom Lays Off Another 900 Workers

Seattle—Nordstrom is finding its 100th year in business to be a painful one. Facing an 85% plunge in net income for its third quarter ending Oct. 31, the $5.53 billion apparel cataloger/retailer announced on Oct. 9 that it had laid off 900 people. Most of the employees worked in corporate and support psositions or in the stores, although the company wasn’t more specific.

The layoffs, which Nordstrom says result directly from the significant falloff in business since the Sept. 11 terrorist attacks, follow 1,600 layoffs throughout September. The 2,500 layoffs combined represent a 5.6% employment decrease.

Although the $310.6 million division, which includes the catalog and Internet businesses, represents less than 6% of the company’s sales, the layoffs and other anticipated cost cuts will likely lead to a scaling back of the print catalog business in favor of its online business, conjectures Lori Wilking, securities analyst at Detroit-based investment firm H&R Block Financial Advisors.

Nordstrom “could dwindle the catalog down and scale back the number of publications to focus more on the Internet,” Wilking says. “It will still have a direct channel, but will probably be more Internet-based.” What with Nordstrom having cut some of its specialty catalogs earlier this year, “e-commerce will be the real driver for the direct channel.”

On the other hand, Wilking, who points out that the layoffs are the first significant job cuts in the company’s history, says she sees the layoffs as “a positive sign that the company is trying to effectively manage costs, which gets away from the norm. It’s a sign,” she says, “that management realizes it needs to do something.”

Nordstrom forecasts profit of $0.03-$0.06 per share for the quarter, appreciably short of earlier forecasts of $0.17-$0.20 per share.