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Retail giant Nordstrom will exit the Canadian market, closing its 13 stores in the country amid flat sales, the company said. Around 2,500 jobs will be lost as a result of the move.
Nordstrom’s decision makes it the second major American retailer to close operations in Canada this year. Bed Bath & Beyond, which was on the verge of filing for bankruptcy in the United States, filed for bankruptcy in February to close its Canadian stores, according to court documents.
Nordstrom court records in Canada paint a bleak picture. The company has lost money every year it has operated in Canada, the company told the court, adding that the Canadian subsidiary accounts for just 3 percent of the group’s net sales. Since its inception, the Canadian company has received $775 million in funding. High operating costs and aftershocks from the coronavirus pandemic led to the company’s decision to close, it said.
“We came to Canada in 2014 with a plan to establish and maintain a long-term business there,” Erik Nordstrom, CEO of the family-owned company, said in a statement. “Despite our best efforts, we do not see a realistic path to profitability for the Canadian business.”
The company operated six Nordstrom stores and seven discount stores in Canada called Nordstrom Rack. The local e-commerce site in Canada suspended operations on Thursday, while stores are expected to close at the end of June, the company said.
The move will hurt the company’s 2023 outlook: The transaction is expected to reduce the company’s net sales by $400 million this year, Nordstrom’s reported quarterly results note. The company expects sales to fall by 2 percent.
Analysis: Nordstrom’s saving grace lies in the luxury segment
The Seattle-based company operates more than 300 stores across the United States and reported earnings of $119 million for the most recent quarter. Men’s clothing, footwear and women’s clothing saw the strongest growth last year compared to 2021.
“There are no changes to Nordstrom US operations or business and Nordstrom US continues to operate as usual,” the company said in a statement.
Fitch Ratings downgraded Nordstrom’s rating earlier in the year, citing operational challenges and several changes in the off-price business. But the stock rose in February when billionaire Ryan Cohen bought a stake in Nordstrom.
Nordstrom’s failure in Canada is not unique. Several other American companies have failed to become profitable in Canada. Target, which operated more than 100 stores in Canada, withdrew from the country in 2015. Another department store chain, Sears, closed its last Canadian store in 2018 after 65 years.