Nordstrom Inc. JWN seems to be doing well with its Trunk Club business, a personalized clothing service line acquired in 2014. After witnessing the growth in this business and seeing significant opportunities ahead, the company has decided to shutdown the Trunk Club fulfillment center in Goose Island in Chicago, IL, and integrate the same into the Nordstrom network of fulfillment and distribution centers, across the U.S. Trunk Club expects to transition to closing this facility by Aug 2017.
Nordstrom has three fulfillment centers across the U.S., located in Elizabethtown, PA; San Bernardino, CA; and in Cedar Rapids, IA. Of these, the Cedar Rapids facility currently engages in fulfilling orders of Trunk Club for Women that was launched last fall. Nordstrom expects to integrate the rest of the Trunk Club operations into its network starting by the end of 2016.
Trunk Club serves its customers online and through its five clubhouses in Chicago, Dallas, Washington D.C., Los Angeles and New York and is headquartered in downtown Chicago.
While the Goose Island facility served Trunk Club well so far, the company decided to close this facility as its expects the growth at Trunk Club to outgrow the capacity of this unit. Further, with the integration of Trunk Club operations into the Nordstrom fulfillment network, the company expects to manage their inventory better and improve customer experience with a superior merchandise mix.
With the closure of Goose Island facility, nearly 250 people will lose their jobs. However, Nordstrom expects to absorb employees willing to stay with the company at either its Trunk Club Chicago clubhouse or a nearby Nordstrom full-line or Nordstrom Rack stores.
Nordstrom has a vast presence in Chicago with four full-line and 10 Nordstrom Rack stores. Nordstrom’s four full-line stores in the Chicago area include stores at Michigan Avenue, Old Orchard Center, Oakbrook Center and Woodfield Shopping Center. While the 10 adjacent Nordstrom Rack stores are located at South Loop, The Shops at State and Washington, Chicago Avenue, Lincoln Park, Shops at Orchard Place, Shops at Oak Brook Place, Orland Park Place, Northbrook, Woodfield and Springbrook Prairie Pavilion.
Additionally, the company has the opening of two more Rack stores in the area lined up for the fall season. These stores are slated to open at Fashion Outlets of Chicago on Sep 30, 2016 and at Algonquin Commons on Oct 27, 2016. The company also plans to open a Last Chance clearance store in Yorktown Center on Oct 20, 2016.
Nordstrom has a strong nationwide network of 326 stores situated across 39 states, including 121 full-line stores in the United States, Canada and Puerto Rico; 200 Nordstrom Rack stores; 2 Jeffrey boutiques; and 1 clearance store.
The stock currently holds a Zacks Rank #5 (Strong Sell) as it has been underperforming for quiet sometime, due to the intense competition, weak margins and fall in mall traffic due to rise of e-commerce that has been plaguing the apparel industry. Nordstrom has lost nearly 26% year to date and about 50% in the past one year.
Other Stocks to Consider
In the meantime, other stocks from the same industry including Christopher & Banks Corp. CBK, sporting a Zacks Rank #1 (Strong Buy), The Children's Place Inc. PLCE and Destination XL Group Inc. DXLG, both carrying a Zacks Rank #2 (Buy), can be solid bets.
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