Some tough times have come to Nordstrom’s tech department, which saw 10 employees laid off last week.
The layoffs come, according to Geek Wire reports, as the Seattle-based department store chain is attempting a new “technology leadership structure.”
According to a statement released by spokeswoman Tara Darrow:
“For the past six months, Nordstrom has been taking a closer look at our technology team to ensure it is best structured to provide a competitive advantage for Nordstrom. Last week we shared our new technology leadership structure with that team. Where some roles have been added and leaders were moved or promoted into them, others will no longer be needed to support the future direction of our organization. We had to make tough decisions that unfortunately resulted in 10 people no longer having jobs with Nordstrom. Those people were notified last week. We are continuing to work through additional details of the structure over the coming weeks.”
The cuts come as Nordstrom is logging increased sales online (over 20 percent of the firm’s business is digital), but also planning to scale back technology projects — which isn’t to say they won’t be spending. Nordstrom has earmarked $300 million to spend on tech and eCommerce in 2016, a flat investment when compared to last year. But last year’s $300 million investment was a 35 percent uptick from the previous year.
“This business model has a high variable cost structure driven by fulfillment and marketing costs in addition to ongoing technology investments,” said Nordstrom CFO Michael Koppel in a conference call with analysts. “With our increased investments to gain market share along with the changing business model, expenses in recent years have grown faster than sales.”
Nordstrom also needs to see these investment pay out — and fairly soon — given that the firm’s net income was down to $180 million last quarter, 30 percent below the same period last year. Stock price has suffered accordingly, down 30 percent from last year.
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