Nordstrom Inc. is closing all of its Canadian stores and cutting 2,500 jobs as it winds down operations in the country, the latest blow to the traditional retail sector fighting to retain customers and survive in the digital era. The Seattle-based retailer has six Nordstrom and seven Nordstrom Rack stores in Canada, which will be shuttered by late June. Its e-commerce business, nordstrom.ca, was due to cease operations immediately.
The closures are the result of regular reviews the company conducts that challenged its longtime plans “to build and sustain a long-term business” in Canada, Chief executive Erik Nordstrom said. “Despite our best efforts, we do not see a realistic path to profitability for the Canadian business,” he said in a statement. “This decision will simplify our structure, intensify focus on our growth and profitability goals and position us to create greater value for our shareholders.”
Lisa Hutcheson, a retail strategist with J.C. Williams group, said as a customer she’s saddened but, as an analyst, not shocked by the announcement. Her office, at One Dundas Street, sits above the Eaton Centre location, so she was a frequent visitor and often observed a lack of customers.
While foot traffic post-pandemic is slowly coming back, downtown retailers continue to be impacted, she added. Nordstrom’s announcement comes just weeks after Bed Bath & Beyond announced it was closing its Canadian operations, including 54 stores.
The Nordstrom stores were also anchor tenants with a lot of square footage, so filling these big spaces is going to be a challenge, said Hutcheson, adding, “and what happens to the adjacent stores and the flow of the traffic?”
Cadillac Fairview, which owns the Eaton Centre, did not immediately return a request for comment.
The Canadian closures were “probably the right choice” and show the company has a lack of confidence in how it could continue to support Canadian losses, said Neil Saunders, the managing director of GlobalData, a retail research agency.
“Although the division is relatively small, and the Canadian market has somewhat limited potential because of its size, it is nevertheless a significant admission of failure that Nordstrom cannot make its proposition work financially,” he wrote in a note to investors. It also underlines the rather tenuous position of the company which wants to focus is finances and firepower on reinvigorating the U.S. operation.”
Nordstrom’s wind down is being completed through an order obtained by the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act. It intends to seek court approval later in March for a liquidation sale, which would begin shortly after.
Nordstrom Canada gift cards will continue to be honoured to the end of the liquidation period, though none will be made available for purchase. Returns and exchanges will be permitted until March 17 at which point all sales and returns will be considered final.
The Canadian wind-down came as Nordstrom released its fourth quarter results, which included net earnings of US$119 million in the period ended Jan. 28. That compared with net earnings of US$200 million during the same period the year before.
As a result of the Canadian closures, Nordstrom expected to record $300 U.S. to $350 million U.S. in pre-tax charges in the first quarter of fiscal 2023. The wind-down is expected to result in a roughly US$400 million decline in net sales.
Source: The Star
Source: Globe and Mail
Source: Financial Post
Source: CBC
