Retail giant Nordstrom will exit the Canadian market, shutting down its 13 stores in the country amid stagnant sales, the company said. The move will cut approximately 2,500 jobs.
Court filings by Nordstrom in Canada reveal a dismal picture. The company lost money in every year of operation in Canada, the company told the court, adding that the Canadian affiliate generated only 3 percent of the group’s net sales. Since its inception, the Canadian entity was given $775 million in funding. High operating costs and aftershocks of the coronavirus pandemic led to the company’s decision to shutter, it said.
“We entered Canada in 2014 with a plan to build and sustain a long-term business there,” Erik Nordstrom, CEO of the family-run business, 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 called Nordstrom Rack in Canada. The local e-commerce website in Canada ceased operations Thursday, while the stores are expected to shutter by late June, the company said.
The move will hit the company’s 2023 prospects: The wind-down is predicted lower net sales of the company by $400 million this year, Nordstrom’s quarterly earnings reported noted. The company said it anticipates a 2 percent drop in revenue.
The Seattle-based company operates more than 300 stores across the United States and reported earnings of $119 million for the latest quarter. Men’s apparel, shoes and women’s apparel had the strongest growth last year versus 2021.
“There is no change to Nordstrom US’s operations or stores and Nordstrom US continues to operate on a business-as-usual basis,” the company said in a statement.
Fitch Ratings had downgraded Nordstrom’s rating at the beginning of the year, citing its operating challenges and multiple changes at off-price business. But its stock surged in February when billionaire investor 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, pulled out of the country in 2015. Another department chain store, Sears, closed its last outlet in Canada in 2018 after a 65-year-run.