August 25, 2023 | 10:23 a.m
Nordstrom chief executive Eric Nordstrom said the upscale department store has seen “historic spikes” in losses from shoplifting incidents – a trend he finds “unacceptable” and “needs to be addressed” by local authorities.
“The losses from theft are at historic levels,” Nordstrom told investors on an earnings call Thursday, shortly after the retailer reported an 8.3% drop in sales in the second quarter that ended July 29.
“And I would say we find that unacceptable and it needs to be addressed.”
The CEO was particularly furious over the brazen incident on Aug. 12, in which a mob of looters ransacked a Nordstrom store in the Topanga section of Los Angeles, stealing thousands of dollars’ worth of merchandise.
Dozens of shoplifters were wearing vests and masks, according to the surveillance video. The thieves were seen attacking the security guards with bear spray.
“What happened at our store in Topanga is certainly concerning to all of us,” said the company president, adding, “The safety of employees and customers is always a top priority.”
“But the loss is concerning,” Nordstrom said.
Nordstrom joins Dick’s Sporting Goods, Ulta Beauty and Target in returning theft to declining sales.
“Although this is unacceptable, it is within our plans,” Nordstrom said. “We haven’t seen the downturn continue to rise beyond what we had planned for.”
Deflation is an industry term used to describe stolen or lost goods.
Since last Friday, Nordstrom shares have fallen more than 10%. The stock traded flat in pre-market activity on Friday.
Dick’s Sporting Goods this week reported a 23% drop in profit in the second quarter even as sales rose 3.6%.
The company attributed the losses to “organized retail crime and our ability to effectively manage inventory shrinkage.”
Target CEO Brian Cornell told investors earlier this month that incidents of shoplifting involving “violence or the threat of violence” rose 120% during the first five months of the year.
“Our team continues to experience an unacceptable amount of retail theft and organized retail crime,” Cornell said during the company’s second-quarter earnings call.
“Unfortunately, theft-related safety incidents are going in the wrong direction.”
Target CFO Michael Fedelcki added that the “Pride” group’s controversial boycott of the retailer also contributed to the quarter’s results.
The National Retail Federation, the nation’s largest retail group, said its latest security survey of nearly 60 retailers found contraction at an average rate of 1.4% last year, accounting for losses of $94.5 billion.
The trade group said the bulk of the contraction – 37% – came from external theft, including products seized during incidents of organized shoplifting.
Other retailers have also reported declining sales figures in recent days.
Foot Locker stock fell nearly a third after the company reported dismal earnings in the second quarter, which it attributes to “continued consumer softness”.
Macy’s share price also fell after it announced lower sales in its shares second quarter earningswhich it blamed on lower consumer spending and an increase in credit card delinquencies.
“We continue to see a cautious consumer,” said Katherine Smith, Nordstrom’s chief financial officer, adding that sales slowed at both her name stores and the Nordstrom Rack Off Prices sign during the third quarter.
And the company warned that delinquencies are gradually increasing, echoing what happened with Macy’s which saw a 41% drop in credit card revenue, even as Nordstrom said revenue for that business rose 5.8% in the quarter.
“(Delinquencies) are now higher than pre-pandemic levels, which could lead to higher credit losses in the second half and into 2024,” Smith said.
Additional reporting by Shannon Thaler
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