The Seattle-based company said that while Trunk Club had delivered top-line growth, the future didn’t look as bright. To that end, third quarter results reported Thursday included a $197 million write-down of the business. News of the devaluation followed the announcement in June that Trunk Club would close its distribution center in Goose Island, Chicago, by August 2017, affecting about 250 full- and part-time employees.
“In August 2014, we acquired this start-up as a new channel to serve customers in a personalized and relevant way. Unfortunately, the business has not performed to the expectations we had when we acquired it and as a result we have reduced the value of that asset,” Blake Nordstrom, co-president of Nordstrom Inc., explained on a call with investors, later adding, “I would want to emphasize while we’re taking the write-down as needed, we’re actually very encouraged with what we’ve learned, the team has learned and how to make the [subscription commerce] model better.”
Trunk Club offers online and in-person concierge services for men and women. Customers can try on items at home or at the company’s “clubhouses” and pay for what they want to keep, with no commitment or minimum purchase requirements.
Nordstrom continued, “We’ve seen some early results in just better connecting with our customers on a more consistent basis that gets them sticky with the brand. The other [area where we saw an opportunity] is that we could be more accurate in what we put in the trunks and what we’re sending out to customers that makes for a much better customer experience.”
“While we have reset our performance goals, we continue to believe that Trunk Club provides us with unique customer experience that we can build upon,” said Michael Koppel, Nordstrom’s chief financial officer and executive vice president. “To help give Trunk Club customers a broader selection of brands, we are also integrating supply chain and fulfillment capabilities over the next year. We anticipate that these, and other changes we’re making, will drive continued growth and improve Trunk Club’s results going forward.”
Total company net sales rose 7.2% to $3.5 billion in the three months ended Oct. 29, while comparable sales increased 2.4%. Nordstrom’s shares (JWN) have ticked up steadily since the Trunk Club write-down was announced Thursday, rising as much as 6 percent in early trading Monday. Nordstrom stock is up nearly 25 percent year-to-date.