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Lead Retail Companies Nordstrom, Lord & Taylor and L Brands Shows Red Flag to Reopening Plans

May 07, 2020 / Nilesh Kumbharkar
SHARESHARESHARE

  • The retail reopenings underway hit a few roadblocks as Nordstrom’s, L Brands and Lord & Taylor all checked in with bad news.

  • All three companies had reported liquidity problems since the pandemic crisis started.

  • The constant stream of retail disruption signals a sea change in the retail landscape as it prepares to exit the pandemic.


The retail reopenings underway hit a few roadblocks on Wednesday (May 6), as Nordstrom’s, L Brands and Lord & Taylor all checked in with bad news. All three companies had reported liquidity problems since the pandemic crisis started, but the convergence of the three events during earnings season focused a harsh spotlight on the realities of post-crisis retail.

The Nordstrom news was the most unexpected. The retailer said on Tuesday (May 5) that it will close 16 full-line stores and adjust its supply chain capabilities to cut costs. The stores to be shuttered were not identified in the company’s statement. The chain said the store closures as well as changes in how it realigns its inventory within regional distribution will save $150 million, in addition to the $500 million in cash reductions it has already announced.


We’ve been investing in our digital and physical capabilities to keep pace with rapidly changing customer expectations. The impact of COVID-19 is only accelerating the importance of these capabilities in serving customers, more than ever, we need to work with flexibility and speed. Our market strategy helps with both, bringing inventory closer to where customers live and work, allowing us to use our stores as fulfillment centers to get products to customers faster, and connecting digital and physical experiences with services like curbside pickup and returns.

- Erik Nordstrom, chief executive officer of Nordstrom, Inc.


Lord & Taylor and its parent company Le Tote had made moves toward bankruptcy about a month ago. According to Reuters, the company is now preparing to liquidate its inventory as soon as its stores reopen, proving that the chain does not expect to exit the pandemic with a healthy balance sheet or acceptable deals with creditors. The chain is reportedly holding off on a bankruptcy filing until it can reopen its stores. Lord & Taylor has lined up liquidators to help it conduct sales and will permanently close all stores once the merchandise is sold.
 

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And L Brands, parent of Bath & Body Works and Victoria’s Secret, also sent up red flags on Tuesday (May 5). The company announced an agreement with Sycamore Partners to terminate its Victoria’s Secret deal, which leaves the troubled chain without a suitor. L Brands said it is “implementing significant cost reduction actions and performance improvements at Victoria’s Secret,” which will include “proactive measures” to ensure liquidity “in light of the ongoing COVID-19 pandemic.”

The constant stream of retail disruption signals a sea change in the retail landscape as it prepares to exit the pandemic.


Change is inevitable, and we can think it’s awful, but it’s just nature, the effect of the pandemic is to accelerate the demise of retailers that had lost their way and that people no longer had a reason to [visit]. There will be a reconfiguration as we come out of this. I don’t know what it’s going to look like, but there will be new players, some existing players will get stronger, and I expect acquisitions will occur. There will be a shakeout. But, in total, retail sales will come back as strong as ever.

- Thomas Robertson, Director of the Baker Retailing Center at Wharton.


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About Nordstrom

At Nordstrom, we empower our employees to set their sights high and blaze their own trails. This is a place where your success and growth are truly a result of your own efforts and achievements. Our teams are made up of motivated people who work hard to become leaders within the company, at all levels of the organization. These well-traveled paths show how hard work, loyalty, a competitive spirit and your unwavering commitment to the customer can take you and your career to new places.In addition to being a great place to have a career, we’re also committed to respecting the environment and supporting our communities.
 

About Lord & Taylor

Lord & Taylor has been innovating and revolutionizing the world of retail since 1826. Offering high-quality apparel and accessories, Lord & Taylor developed style and fashion for the discerning Manhattan customer. Known for raising the bar for class and service, Lord + Taylor was the first department store to develop the concept of personal shopping, literally inventing new ways to make the customer feel unique and cater to every taste. Inventing the concept of personal shopping isn’t the only place Lord & Taylor was first: we were the first retail shop to move to the legendary Fifth Avenue, and the first department store to name a woman president, Dorothy Shaver.Changing the game is what we do—and we’re looking for outside-the-box thinkers and creative innovators to help lead us into another 200 years of success.