Nordstrom Inc (NYSE: JWN) announced on Thursday that it would wind down its operations in Canada, closing down all 13 stores and laying off about 2,500 employees.
“We expect elevated inflation and rising interest rates would continue to weigh on consumer spending, especially in the first half of the year,” Nordstrom interim Chief Finance Officer Michael Maher said in a post-earnings call.
The e-commerce store ceased operations on Thursday, while the in-store operations of the six Nordstrom and seven Nordstrom Rack stores are estimated to be completely wound down by the end of June. The move is expected to result in a drop of $400 million in total net sales in fiscal 2023, and a $35 million rise in total earnings before interest and taxes.
According to chief executive Erik Nordstrom, who talked about right-sizing the company’s inventory, the decision to close in Canada “will enable us to simplify our operations and further increase our focus on driving long-term profitable growth in our core U.S. business.”
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“We entered Canada in 2014 with a plan to build and sustain a long-term business there. Despite our best efforts, we do not see a realistic path to profitability for the Canadian business,” he added. “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 wind down is being facilitated through an Initial Order from the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (CCAA).
The closure follows that of Bed Bath and Beyond, whom earlier this year indicated they would also be exiting the Canadian market after filing for creditor protection. Their closure was blamed on the “broader economic downturn,” as well as lasting impacts from the pandemic.
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