Nordstrom’s $350 million purchase Trunk Club might’ve been a fashion faux pas.
The Seattle retailer is taking a $197 million write-down on the personal styling service, valuing it at less than half of what Nordstrom paid in 2014.
“While this business continues to deliver outsized top-line growth, current expectations for future growth and profitability are lower than initial estimates,” Nordstrom said in the press release. “To further improve the customer experience and better position Trunk Club’s business for profitable growth, the Company is making a number of operational changes.”
Trunk Club connects shoppers with a personal stylist who then selects clothes and accessories and sends them by mail. The customer can sort through the personalized “trunk” at home and return items he or she doesn’t like at no charge. The service was initially just for men but Nordstrom opened it up to women after the acquisition.
Until recently, Trunk Club was free to join but Nordstrom introduced a $25 one-time fee for new members in October.
Trunk Club isn’t the only aspect of Nordstrom’s business undergoing “operational changes.” The company laid off 120 employees from its tech team in March and then announced as many as 400 “corporate center” jobs would be slashed a month later. In May, Nordstrom’s VP of digital and other leaders departed as part of the company’s ongoing tech upheaval.
Nordstrom’s bullish acquisition of Trunk Club was probably motivated by a desire to combine personal styling and e-commerce. Nordstrom has been trying to hone its digital strategy to better compete with online retailers, like its neighbor Amazon.