Nordstrom bought Trunk Club just two years ago for $350 million, and now, the department store says the purchase stands at half of its original value.
Announcing that it is taking a $197 million write-down on Trunk Club, Nordstrom reps said future growth and profitability are lower than initial estimates. In its third-quarter earnings release, the upscale retailer said it will be making a number of operational changes moving forward.
Founded in 2009 by then-MBA student Joanna Van Vleck, the personalized clothing service was originally based in Oregon and moved to a Chicago headquarters after U.S. Venture Partners led a $11 million Series A funding round and Brian Spaly took over as CEO. The concept — which first started with men’s clothing and recently expanded to women’s as well — allows customers to work with a personal stylist to choose clothing and ship it to them in a custom, tailored box. The customer can pick and choose the items through the digital platform or in person at a handful of brick-and-mortar shops. Nordstrom acquired the business in 2014.
Recently, in October, Trunk Club bumped up its “home try-on” fee from free to $25 and slashed its “try-on period” to five days from 10.
Unfortunately, this does not come as a surprise for some analysts, as Nordstrom at one point released that Trunk Club was never profitable, despite Spaly saying otherwise.
