Subscription Commerce Takes A Hit – TrunkClub Writedown

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We have to read between the lines on this story.  It looks to me that Trunk Club has decent top line growth, but remains unprofitable.

Here’s how Sourcing Journal reports on Nordstrom’s huge $200 million write-down.

Subscription commerce took another knock Thursday when Nordstrom declared it had written down more than half the value of Trunk Club, just two years after paying $350 million for the concierge service.

The Seattle-based company said that while Trunk Club had delivered top-line growth, the future didn’t look as bright. To that end, third quarter results reported Thursday included a $197 million write-down of the business. News of the devaluation followed the announcement in June that Trunk Club would close its distribution center in Goose Island, Chicago, by August 2017, affecting about 250 full- and part-time employees.

“In August 2014, we acquired this start-up as a new channel to serve customers in a personalized and relevant way. Unfortunately, the business has not performed to the expectations we had when we acquired it and as a result we have reduced the value of that asset,” Blake Nordstrom, co-president of Nordstrom Inc., explained on a call with investors, later adding, “I would want to emphasize while we’re taking the write-down as needed, we’re actually very encouraged with what we’ve learned, the team has learned and how to make the [subscription commerce] model better.”

Read the rest of the story here.