Nordstrom CEO reports ‘historical highs’ in losses from theft

Nordstrom CEO Erik Nordstrom said the upscale department store has been experiencing “historical highs” in losses from shoplifting incidents — a trend that he finds “unacceptable” and which “needs to be addressed” by local authorities.

“Losses from theft are at historical highs,” Nordstrom told investors on an earnings call on Thursday shortly after the retailer reported an 8.3% drop in sales in the second quarter which ended July 29.

“And I’d say we find it unacceptable and needs to be addressed.”

The chief executive was particularly incensed over the brazen Aug. 12 incident in which a mob of shoplifters ransacked a Nordstrom in the Topanga section of Los Angeles — making off with thousands of dollars worth of goods.

Dozens of shoplifters were wearing hoodies and masks, according to surveillance video. The thieves are seen attacking security guards with bear spray.

“Certainly, what happened in our Topanga store is disturbing to all of us,” the company boss said, adding: “The safety of employees and customers is always a top priority.”

“But the loss is a concern,” Nordstrom said.

Nordstrom joins Dick’s Sporting Goods, Ulta Beauty, and Target in attributing theft to a drop in sales.

“That being said, while it’s unacceptable, it is within our plans,” Nordstrom said. “We have not seen continuing rising of shrinkage that has exceeded what we planned.”

Shrinkage is an industry term used to describe stolen or lost merchandise.

Since last Friday, shares of Nordstrom were down by more than 10%. The stock was trading flat in premarket activity on Friday.

Dick’s Sporting Goods this week reported a 23% drop in profits 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 shrink.”

Target CEO Brian Cornell told investors earlier this month that shoplifting incidents that included “violence or threats of violence” surged 120% during the first five months of the year.

“Our team continues to face an unacceptable amount of retail theft and organized retail crime,” Cornell said during the company’s second-quarter earnings call.

“Unfortunately, safety incidents associated with theft are moving in the wrong direction.”

Target CFO Michael Fiddelke added that boycotts of the retailer’s controversial “Pride” collection also contributed to the quarter’s results.

The National Retail Federation, the nation’s largest retail trade group, said its latest security survey of roughly 60 retailers found shrink clocked in at an average rate of 1.4% last year, representing $94.5 billion in losses.

The greatest portion of shrink — 37% — came from external theft, including products taken during organized shoplifting incidents, the trade group said.

Other retailers have also reported sagging sales figures in recent days.

Foot Locker’s stock plunged by nearly a third after the company reported dismal second-quarter earnings, which it attributes to “ongoing consumer softness.”

Macy’s stock price also fell after it announced declining sales in its second-quarter earnings, which it blamed on a reduction in consumer spending and an uptick in credit card delinquencies.

“We continue to see a cautious consumer,” said Nordstrom finance chief Catherine Smith, adding sales slowed at both its eponymous stores and off-price Nordstrom Rack banner during the third quarter.

The company warned of delinquencies increasing gradually, echoing Macy’s which saw a 41% slump in credit card revenue, even as Nordstrom said revenues from that business rose 5.8% in the quarter.

“(Delinquencies) are now above pre-pandemic levels, which could result in higher credit losses in the second half and into 2024,” Smith said.

Additional Reporting by Shannon Thaler