Nordstrom Rideau Centre, Ottowa, Canada – Photo: Nordstrom
Nordstrom has decided to shutter its small base of stores in Canada, making it the latest U.S.-based retailer to face a chilly reception after expanding up north. The move is designed to help the chain focus on its core U.S. business amid the challenged economy.
The Canadian business, with six Nordstrom, seven Rack locations and the Nordstrom.ca website, accounted for three percent of sales.
“We entered Canada in 2014 because we believed it presented a compelling opportunity, and we are grateful for the many customer relationships we have built over the years,” said Erik Nordstrom, CEO, Thursday on the retailer’s fourth-quarter analyst call. “Despite our team's best efforts, including multiple initiatives to improve our outcomes, our Canadian business has not been profitable. The impact from COVID drove further losses with no realistic path to sustainable profitability.”
Pre-tax charges ranging from $300 million to $350 million will be taken in the first quarter to wind down Nordstrom’s investment.
Among other setbacks, Lowe’s, in early February 2023, completed the sale of its Canadian operations, including 450 corporate and independent affiliate dealer stores, to private equity firm Sycamore Partners to likewise focus on U.S. operations.
The most widely-covered exit was Target’s closure of all its 133 Canadian stores in 2015, just two years after entering the country. Out-of-stocks, higher prices than in the chain’s U.S. stores, and overly-rapid expansion were cited as factors in the failed expansion.
Other U.S. chains facing stumbles in Canada include Best Buy, Sears, Big Lots, Sony, RadioShack and Express.
Other challenges for U.S. retailers operating in Canada include comparatively higher labor and real estate costs, widely-dispersed distribution, and idiosyncratic regulations, including the requirement that packaging must be in both English and French.
Assuming Canadian consumer tastes and trends are similar to the U.S. is also often cited as a common fault for retailers new to Canada. Ben Hanuka, a lawyer focused on commercial and franchise disputes, wrote in the Huffington Post, "While major Canadian shopping centres may seem to the untrained eye not much different from their US counterparts, significant differences in consumer patterns and preferences are alive and well."
U.S. retailers finding success in Canada include Home Depot, Staples, Costco, Walmart and Starbucks.
- Nordstrom Reports Fourth Quarter 2022 Earnings, Announces Wind-Down of Canadian Business – Nordstrom
- Nordstrom (JWN) Q4 2022 Earnings Call Transcript – The Motley Fool
- Sycamore Partners Completes Acquisition of Lowe's Canadian Retail Business – Sycamore Partners/PRNewswire
- Lowe's Announces Sale Of Canadian Retail Business To Sycamore Partners – Lowe's
- Lowe’s sells its Canadian ops to focus on the U.S. – RetailWire
- Target gives up on Canada – RetailWire
- The Dangerous Mistake U.S. Retailers Make in Canada – Huffington Post
- Woe Canada! Many U.S. retailers fail up north – CNN
- It’s oy, Canada, for many U.S. retailers – Associated Press/The Daily Record
- US Retailers Stumble In Canada – Financial Times