Nordstrom’s Canadian court filings paint a bleak picture. According to the corporation, it lost money in every year of operation in Canada, and the Canadian affiliate generated only 3% of the group’s net revenues. The Canadian organization has received $775 million in investment since its formation. According to the company, the decision to close was prompted by high operational costs and the aftershocks of the coronavirus pandemic.
“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.”
In Canada, the firm operated six Nordstrom locations and seven Nordstrom Rack discount stores. The local e-commerce website in Canada suspended operations on Thursday, and the stores are slated to close by late June, according to the company.
The move will have a negative impact on the company’s 2023 prospects: According to Nordstrom’s quarterly financial report, the wind-down is expected to reduce the company’s net sales by $400 million this year. Revenue is expected to fall by 2%, according to the company.
The Seattle-based company has over 300 stores across the United States and recorded $119 million in earnings for the most recent quarter. Men’s apparel, shoes, and women’s apparel saw the most growth last year compared to 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.
Nordstrom’s rating was cut by Fitch Ratings at the start of the year, citing operational issues and frequent adjustments in the off-price division. But, its shares rose in February after billionaire investor Ryan Cohen purchased a stake in Nordstrom.
Nordstrom’s failure in Canada is not an isolated incident. Several other American businesses have struggled to make a profit in Canada. Target, which had over 100 locations in Canada, exited the nation in 2015. Sears, another department store brand, shuttered its last Canadian shop in 2018 after a 65-year run.