Nordstrom will shutter its six full-line department stores and seven Nordstrom Rack stores in Canada, along with its Canadian website, in a move that is expected to save the retailer $35 million in EBIT in fiscal 2023 compared to fiscal 2022. The ecommerce site closed on March 2, and the company expects to wind down its brick-and-mortar operations by late June 2023. Nordstrom’s Canadian operations employ approximately 2,500 people.
“We entered Canada in 2014 with a plan to build and sustain a long-term business there,” said Erik Nordstrom, CEO of Nordstrom Inc. in a statement. “Despite our best efforts, we do not see a realistic path to profitability for the Canadian business. We want to thank our team for their performance and dedication in serving customers in Canada. This decision will simplify our structure, intensify focus on our growth and profitability goals and position us to create greater value for our shareholders.”
The announcement came as Nordstrom reported its Q4 2022 and FY 2022 results. During Q4, which ended Jan. 28, 2023, net sales decreased 4.1% compared to Q4 2021. However, full-year revenue increased 5% compared to the previous fiscal year.
For FY 2023, Nordstrom is projecting a 4% to 6% revenue decline, including an approximately 250 basis point negative impact from the wind-down of its Canadian operations. However, the retailer’s executives touted an improved inventory position going into the new fiscal year, down 15% from the previous year and comparable to 2019.
“As we enter fiscal 2023, we are focused on enhancing the customer experience, improving Nordstrom Rack performance, increasing inventory productivity and continuing to advance our supply chain optimization initiatives,” said Nordstrom.” We remain confident in the strength of our brands and our ability to drive profitable growth and deliver long-term value to our shareholders.”
Like many other retailers, particularly in the department store vertical, Nordstrom has had a challenging time in the face of high inflation and overall economic uncertainty. The retailer announced plans in September 2022 to lay off approximately 20% of the workers at a Midwestern distribution facility in anticipation of slowing demand.