Nordstrom has written down more than half the value of Trunk Club, the Chicago-based shopping service that helps men find the perfect outfit. Nordstrom’s $197 million write-down is valuing Trunk Club at less than half of the $350 million that Nordstrom paid for it in 2014, according to its third quarter earnings report.
“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 is a service where customers consult with a stylist and receive clothing and accessories sent to their homes. The customers keep the products they like and ship back what they don’t want. There are also six locations for an in-person shopping experience.
Changes to Trunk Club’s operations have occurred recently. Until this fall, the service was free but in October they started charging a $25 “home try-on” fee for new customers.
“What Trunk Club is doing in the personal styling space is a natural extension of our core business,” said Erik Nordstrom, president of Nordstrom Direct, in a previous press release. “This acquisition is reflective of how we want to move quickly to evolve with customers by finding more ways to deliver a great shopping experience.”
In Q2, Nordstrom reported unadjusted earnings of $0.67 per share, which exceeded company expectations, according to a Nordstrom press release regarding second quarter sales.