Nordstrom will close down all 13 of its Canadian stores due to poor sales in the Canadian market, the company reported in a statement.
The winding down of the operations will proceed under the Companies’ Creditors Arrangement Act (CCAA). Nordstrom in Canada has declared that it is insolvent in Canada, meaning that it cannot meet its debt payments on time.
The CCAA “is a federal law in Canada that provides insolvent companies with debts in excess of $5 million an orderly and a supervised means to restructure their businesses, including through an orderly liquidation and wind-down of operations,” according to the company’s statement.
In essence, the CCAA protection will give Nordstrom more time to shut down business operations.
Bed Bath & Beyond also closed its Canadian stores this year. Its stock in the U.S. has been declining in value since February 6.
Nordstrom’s stock value in the U.S. is having similar issues, declining by over 18% from February 6 to March 3.
In recent years, two other large corporations have failed in the Canadian market as well. Target ceased its Canadian store operations in 2015. At the time, Target had over 100 stores in the country.
Sears operated in Canada for 65 years but closed all Canadian locations in 2018.
Nordstrom stores in the Canadian market were only bringing in 3% of the company’s total net sales. According to court filings, the company has been losing money every year in its Canadian locations.
Like many retail companies, the COVID-19 pandemic had a negative impact on Nordstrom’s operations in Canada.
Nordstrom came to Canada in 2014 “with a plan to build and sustain a long-term business there,” according to CEO Erik Nordstrom, as per the company’s statement.
He said that the company tried its best to make its Canadian stores succeed, but there came a certain point where he did not “see a realistic path to profitability” in Canada.
The 13 stores closing include six Nordstroms and seven Nordstrom Racks. The Nordstrom Canada website shut down last Thursday, and stores will close by late June.
The closing of the Canada operations will lower overall sales and revenue for 2023. Sales are predicted to go down by $400 million and revenue by 2%. However, there is still some hope for growth in the company, as it saw growth in sales of women’s and men’s apparel and shoes in 2022.
Business will continue as usual in the U.S. “There is no change to Nordstrom US’s operations or stores and Nordstrom US continues to operate on a business-as-usual basis,” according to a statement on the company’s Canadian website.