honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Tuesday, May 13, 2008

NORDSTROM
Sales fall, jobs cut after big opening

By Andrew Gomes
Advertiser Staff Writer

Hawai'i's first full-line Nordstrom department store opened at Ala Moana Center with a bang two months ago. But since then sales have fizzled somewhat and led to job cuts.

Seattle-based Nordstrom Inc. said it has laid off 30 employees in the last month or so because of softer sales, following the abrupt shutdowns of major Hawai'i carriers Aloha Airlines on March 31 and ATA Airlines on April 2.

The layoffs came on top of about 70 other employees who quit for personal reasons or were fired for not meeting Nordstrom performance standards, according to company spokeswoman Brooke White.

White said voluntary departures or performance-related terminations are typical for any new store because Nordstrom sales people work in an intensely competitive environment with commission-based pay and hourly sales targets.

"There's always fallout on both sides, meaning employees find out we're not for them, or we find out they're not for us," she said. "It isn't always a perfect fit."

Overall, the 210,000-square-foot Ala Moana Nordstrom, which opened on March 7, employs about 500, down from about 600.

Nordstrom's move is not necessarily part of any broad job loss trend in Hawai'i's retail industry due to a slowing economy, although that has been the case in many Mainland cities.

Local retail industry analyst Doug Smoyer of Retail Strategies Inc. said retailing in Hawai'i has fared much better than on the Mainland, where several major retailers are cutting jobs, closing stores and filing for bankruptcy.

"For us, it's not all bad," he said, adding that sometimes retailers use downward shifts in the economy as an opportunity or excuse to rebalance their workforce.

"It's all in the nature of the business," Smoyer said. "It's just sort of a housecleaning."

Often, retailers opening new stores tend to over-hire so as not to be left in a shorthanded situation that can disappoint customers on their first impression and diminish return business, Smoyer said.

Four years ago, Sam's Club laid off 57 of 400 employees one month after opening its store on Ke'eaumoku Street, saying sales projections didn't meet initial expectations.

Nordstrom, as a retailer that strives to deliver extraordinary customer service, has more of its reputation riding on not being understaffed and delivering less-than-expected service, especially for its first full-line department store in the state.

Also, Nordstrom, like other retailers opening new stores, sometimes needs to realign initial staffing levels that were based on projections.

"We take a best guess at staffing levels" before a store opens, White said.

But business at the Ala Moana Nordstrom also weakened in the beginning of April after Aloha and ATA ceased passenger service.

"Due to softened business we've had to lay off some employees," White said. "Sadly we've had to part ways with people we wish we wouldn't have had to. It's a tough environment."

Ala Moana is Hawai'i's largest shopping center, and its customer base is a roughly equal mix of visitors and residents.

A representative of the mall could not be reached yesterday to comment on changes in customer traffic or sales. Mall owner General Growth Properties earlier this month noted in a call to stock analysts that, through the end of March, the new Nordstrom store was doing "terrifically well."

But in April, Hawai'i passenger arrivals by air were down 11.3 percent from a year earlier, according to raw data from the state that include travel by local residents.

April statistics for Hawai'i employment by industry have not been released yet by the state Department of Labor and Industrial Relations.

White said if business bounces back and maintains strength, Nordstrom would likely seek to rehire some laid-off employees.

Passenger arrivals by air from May 1 to 11 were down 1.6 percent over the same period last year.

"We're still very pleased with our store there (in Honolulu)," White said. "We've been in business over 100 years. We know how to weather the retail cycles. We're not going anywhere."

Companywide, Nordstrom has increased revenue and income over the last several years, but this year through April has reported lower total store sales each month despite opening three new stores in that time that contributed to revenues.

White said Nordstrom hasn't made any store job cuts to reduce expenses generally across the company to improve its bottom line, but is adjusting staffing levels in response to specific store performance.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.