Nordstrom To Close San Francisco Stores This Summer

Citing the changing dynamics of downtown San Francisco, Nordstrom
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is pulling out of Westfield San Francisco Centre at the end of August by opting not to renew its lease. The retailer also declined to renew the lease for its Rack Store across the street, setting a closing date of July 1.

Noting that it’s spent more than 35 years serving customers in downtown San Francisco, Jamie Nordstrom, chief stores officer, in a message to the company’s team members, said, “We’ve made the difficult decision not to renew our leases at the San Francisco Centre store and the Market Street Rack.”

While Nordstrom didn’t mention crime and homelessness directly, he said the market “has changed dramatically over the past several years, impacting customer foot traffic to our stores and our ability to operate successfully.”

Unibail Rodamco Westfield, which owns the San Francisco Centre, took aim at city leaders and local law enforcement. “The planned closure of Nordstrom underscores the deteriorating situation in downtown San Francisco,” the company said. “A growing number of retailers and businesses are leaving the area due to the unsafe conditions for customers, retailers, and employees, coupled with the fact that these significant issues are preventing an economic recovery of the area.

“URW has actively engaged with city leaders for many years to express our serious concerns, which are shared by our customers and retailers,” a statement from the shopping center giant said. “We have urged the city to find solutions to the key issues and lack of enforcement against rampant criminal activity. The current environment is not sustainable for the community, or businesses, and we are hopeful the city will implement the changes that are so urgently needed.”

Nordstrom isn’t the only retailer to pull up stakes in San Francisco, it’s just the latest. The growing list includes Whole Foods Market
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, which in April closed due to the increasing crime problem in the city’s downtown. Amazon announced it will close all four Amazon Go stores in San Francisco, and retailers including Office Depot and Anthropologie have also said they’re planning to leave downtown.

Reasons for leaving San Francisco include the loss of the work force downtown as many companies are allowing employees to work remotely, contributing to dwindling foot traffic. The lack of office workers has also contributed to the rise in crime and the homeless population. Organized crime, not just petty theft, is blamed for about half of the $94.5 billion in stolen merchandise in the U.S.

It’s also become increasingly difficult for retailers to hire sales associates amid the negatively spiraling conditions on the ground. The looming recession economists and Wall Street analysts are expecting isn’t helping matters either.

Nordstrom said in March that it will close all of its Canadian stores by late June and cut 2,500 jobs. The retailer operated six full-size department store locations and seven Nordstrom Rack units. Nordstrom said it didn’t see a realistic path to be profitable in Canada, so it decided to exit the market.

Nordstrom reported financial results for the full year ended January. The retailer’s revenue declined 3.72% to $4.3 billion. Net income dropped 40.5% to $119 million, and diluted earnings per share tumbled 40.32%. The retailer’s stock on Wednesday fell 20 cents to $14.68 per share, a 1.34%.

“I want to be really clear that this decision had nothing to do with our teams’ hard work,” said Nordstrom in his letter to employees. “They should be proud of everything they’ve achieved together and the way they’ve shown up and served the community. We’re working with each impacted employee to support them through this transition and find new roles within the company wherever possible.”

Nordstrom stressed that stores will continue to play a critical role in delivering its Closer to You strategy, which represents having the right products and selection closer to clients’ homes by offering order pick-up, returns and services in their communities.

He also said that the retailer continues to be opportunistic about new store locations, relocations and concepts. “In fact, we have 20 new Rack store openings planned this year with more to come in 2024,” he said. “We also remain committed to the Bay Area market and have made significant investments in our stores there over the past several years.”

Nordstrom recently announced that a new Rack store will open in Pinole, Calif. and the company said it completed a remodel at its Valley Fair Nordstrom unit. The retailer also opened a new Rack unit last month in North Hollywood, Calif.