Due to financial difficulties, the Nordstrom department store chain is unable to pay its full rent.
The company has notified landlords that it will only pay half of the rent for the time being. And this will continue until sales reach 90% from 2019 figures. At the same time, the company undertakes to pay insurance, utility bills and maintain the premises in accordance with the requirements of the lease.
This became known from an official letter sent by the president of the network to property owners. It is reported that we are talking only about stores of a simplified format. Nordstrom Rack. To date, there are 250 of them, which is approximately 60% of the total number of outlets owned by the network.
It also became known that in order to reduce costs, Nordstrom will cut about 20% employees (according to other sources - 25%). To date, about 68,000 people work in the chain stores. The company was also forced to close a number of stores.
All this is a necessary measure, against the backdrop of a 40% decline in sales and a loss of $ 521 million, just this year. The coronavirus epidemic has become a difficult test for the network, which was already in a difficult situation. Moreover, it has been repeatedly suggested that Nordstrom may file for bankruptcy before the end of this year.
Earlier, a Nordstrom spokesperson said the company is implementing a new operating model that will allow it to better serve customers. Supply chains will be redefined, and investments in data analytics technology will enable the company to become more agile.
With its actions, Nordstrom is clearly trying to be flexible with landlords, trying not to cause a wave of negativity, as it happened with other companies that simply refused to pay rent. However, it appears that the letter was sent out en masse, without prior discussion, and this could lead to a number of lawsuits. Many landlords are "clearly unimpressed" by Nordstrom, a spokesman for real estate firm SiteWorks said.