Nordstrom and Nordstrom Rack to Exit Canada and Shut All Stores

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Seattle-based Nordstrom announced on Thursday that it will be exiting its Canadian operations, including shutting its six full-priced Nordstrom stores as well as its seven off-price Nordstrom Rack locations and Nordstrom.ca. Nordstrom’s first store in Canada opened in 2014 and its first Rack location opened in 2018. 

“We took decisive actions to right-size our inventory as we entered the new year, positioning us for greater agility amidst continuing macroeconomic uncertainty. We also made the difficult decision to wind down operations in our Canadian business. This will enable us to simplify our operations and further increase our focus on driving long-term profitable growth in our core U.S. business,” said Erik Nordstrom, chief executive officer of Nordstrom, Inc. “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. We remain confident in the strength of our brands and our ability to drive profitable growth and deliver long-term value to our shareholders.”

Nordstrom at CF Chinook Centre (Image: Lee Rivett)

Nordstorm will take a financial hit of between $300 and $350 million according to an earnings call on Thursday. Sales at Nordstrom in Canada were about $515 million for fiscal 2022, representing about 3% of sales for the entire company. The company lost $72 million during that time. About 2,330 people will lose their jobs with the closure of Nordstrom’s stores in Canada.

In the earnings call, CEO Erik Nordstrom said that the retailer had high hopes for Canada and despite its “best efforts”, never turned a profit in Canada since its entry into the country in 2014. He also said that Covid-19 was a factor and had a negative impact on sales.

Erik Nordstrom said that Canadian employees will be treated with “fairness and respect” and that an employee trust will be created to provide additional benefits to staff during the wind-down. He then thanked employees for their years of service at Nordstrom during the call.

Liquidation sales are expected to start around March 20 of this year, pending approval of the Court monitor overseeing the winding down of Nordstrom’s Canadian operations under the Companies Creditors’ Arrangement Act. Any gift cards will be honoured until the end of liquidation for purchases in-store, and no new gift cards can be purchased after today.

The Nordstrom.ca site is no longer selling merchandise — orders placed before today will be fulfilled and after March 17th, all sales will be final and returns and exchanges will no longer be permitted, according to Nordstrom.

Foodservice businesses in Nordstrom stores, which include restaurants, bars and coffee bars, will close on or before March 15. Nordy Club Canada members will cease to accrue new points effective as of 11:59 pm EST March 2, 2023. 

Nordstrom at CF Pacific Centre (Image: Lee Rivett)

Nordstrom’s first Canadian store opened in September of 2014 at CF Chinook Centre in Calgary. The 140,000 square foot store kicked off a multi-year expansion that saw other full-priced stores open in major Canadian cities. That included the March 2015 opening of the 157,000 square foot Nordstrom store at CF Rideau Centre in downtown Ottawa, the September 2015 opening of a 230,000 square foot flagship at CF Pacific Centre in downtown Vancouver, The September 2016 opening of a 220,000 square foot flagship at CF Toronto Eaton Centre in downtown Toronto, the October 2016 opening of a 200,000 square foot store at Yorkdale in Toronto, and the September 2017 of a 140,000 square foot location at CF Sherway Gardens in Toronto

Nordstrom Rack opened its first Canadian store in March of 2018 at Vaughan Mills near Toronto. Nordstrom Rack stores subsequently opened at Deerfoot Meadows in Calgary, at Yonge and Bloor in downtown Toronto, at Ottawa Train Yards in Ottawa, South Edmonton Common in Edmonton, Heartland Town Centre in Mississauga, and most recently at the Willowbrook Shopping Centre in Langley near Vancouver in September of 2020. The store count for Nordstrom Rack in Canada sits at seven units, and the retailer said in years past that it planned to operate between 12 and 15 Rack stores in Canada. Nordstrom Rack stores are typically in the 30-40,000 square foot range. 

Before the pandemic, there were signs that Nordstrom was struggling in Canada. Retail Insider was provided sales numbers for Nordstrom’s Canadian stores in 2019 and it was becoming apparent that there were challenges. While the Vancouver store’s sales were strong in the $300 million range annually, the other five stores failed to meet targets — although the CF Toronto Eaton Centre locations was said to be selling in excess of $100 million annually, which wasn’t bad. Still, things didn’t look good when most of the luxury brands exited Nordstrom’s Toronto stores — at CF Toronto Eaton Centre, almost all of the luxury brand bag/accessory shop-in-stores on the main floor shuttered during the pandemic, as did almost all of the luxury women’s boutiques on the third floor. At Toronto’s Yorkdale, Nordstrom has maintained most of the luxury brand shops for bags on its main floor, though almost all of the luxury shops for women’s ready-to-wear had shut before the end of 2022. Brokers in the know had commented on how the neighbouring Canada Goose store at Yorkdale was doing higher sales than the much larger Nordstrom location in the mall. 

A recent visit to the Vancouver Nordstrom store showed a well-stocked flagship with a substantial amount of luxury offerings for women and men, as well as a robust offering of luxury brand bags and footwear. The Vancouver store is the only Nordstrom in Canada to see such an expansive assortment of brands and it’s also one of the most luxury-heavy in the chain, and has been said to be the company’s top-selling store in recent years. 

At the same time, sources told Retail Insider that some high-spending Chinese shoppers had moved on to other places, impacting luxury sales at Nordstrom in downtown Vancouver as well as other retailers in the area. 

Nordstrom at CF Toronto Eaton Centre (Image: Dustin Fuhs)

Nordstrom’s exit from Canada could partly be due to a Canadian connection. Montreal-based Ryan Cohen, who is also Chairman of GameStop, recently bought a substantial number of shares in Nordstrom, giving him the opportunity to shake up the retailer’s board. And besides making changes to the board, Cohen was said to be supporting cost-cutting as Nordstrom’s market cap declines. 

It’s not known if Cohen’s influence led to Nordstrom’s decision to exit its Canadian operations, though he noted challenges to Nordstrom over the December 2022 holidays which included price markdowns, an inventory glut, and lacklustre sales. News of his share purchase sent Nordstrom shares soaring in early February. 

The announcement that Nordstrom is exiting Canada will send shockwaves through the industry. Even though it has far fewer stores than Target which exited Canada in 2015, Nordstrom’s move into Canada was expected to be a runaway success with many Canadians being fans of the retailer’s US stores. The optics of Nordstrom’s exit will be a black eye on Canada for a time. 

Retail Insider’s first article in 2012 was about Nordstrom’s possible entry into Canada, which was subsequently confirmed with the acquisition by landlords of several former Sears locations which were overhauled for Nordstrom stores. That included Nordstrom moving into former Sears boxes in Vancouver, Calgary, Ottawa and CF Toronto Eaton Centre in Toronto. The Yorkdale and CF Sherway Nordstrom locations were newly constructed stores. 

Nordstrom Rack at One Bloor East (Image: Dustin Fuhs)

Thus Cadillac Fairview is particularly exposed to Nordstrom’s exit, owning five of the six malls where Nordstrom stores are located in Canada.

The exit of Nordstrom from Canada is sad news for the retailer which had high hopes for the Canadian market. More Nordstrom stores had been expected for Canada. In 2015, Nordstrom had been looking at opening a 150,000 square foot store at West Edmonton Mall in Edmonton, and plans were cancelled when oil prices tanked at the time. In Montreal, a source told Retail Insider that in 2019 Nordstrom had been looking at opening in the Royalmount project along with French department store Galeries Lafayette. 

Nordstrom’s exit from Canada could give La Maison Simons an opportunity to expand further — the Quebec City-based large-format retailer would likely see success with downtown stores in Toronto and Vancouver, as well as possibly in Calgary where it has a downtown store. In years past, Simons had been looking to open at Toronto’s Yorkdale Shopping Centre and now the opportunity is there. CF Sherway Gardens might be too close to Square One where Simons has a store, though the opportunity presents there as well. CF Rideau Centre in Ottawa is already home to a beautiful Simons store so landlord Cadillac Fairview will need to repurpose the Nordstrom space once the store closes in that mall.  

Nordstrom Rack stores are considerably smaller than the full-priced Nordstorm locations in Canada. Finding new tenants and filling these spaces won’t be as challenging for landlords as Nordstrom’s bigger full-priced stores. At the same time, Bed Bath & Beyond recently announced that it is exiting Canada which will include vacating 65 stores of similar sizes. 

Winners will be a winner with Nordstrom Rack’s exit, as will its TJX-owned sister brands Marshalls and HomeSense. Off-price concept Saks OFF 5TH, which is said to be underperforming in Canada, could also see a boost with less competition following Nordstrom Rack’s Canadian exit. 

Nordstrom’s large-format fashion store positioning in terms of price-point is, for the most part, between Hudson’s Bay and Holt Renfrew. Nordstrom’s exit will send some customers to both retailers as well as Saks Fifth Avenue, which at press time operates three standalone stores in the Toronto and Calgary markets. 

The department store model has struggled in North America in recent years. And while Nordstrom isn’t technically a department store (many refer to it as a large-format fashion retailer), similar retailers in recent years have shuttered as consumer preferences have shifted. The rise of online shopping, specialty stores and brands opening their own stores have impacted large-format fashion retailers and department stores, not to mention discount retail, off-price and category killers. 

Nordstrom Rack (Image: Dustin Fuhs)

At one time, department stores were places to discover brands and played a key role in the retail industry. Competition and a shift to digital has made department stores nearly irrelevant in North America. At the same time, in major cities in Europe and Asia, department stores are thriving as entertainment centres. Stores such as Selfridges in London, Galeries Lafayette in Paris, Lotte in Seoul and others feature a roster of luxury brand concessions as well as ample food-and-beverage offerings and other things to drive consumers into stores. Investment and creativity is required for such a successful retail store, and in North America the ‘art of the department store’ appears to be, for the most part, a thing of the past. 

David Ian Gray, Principal and strategist at Vancouver-based DIG360, agrees with the sentiment, noting that Nordstrom never ended up creating a Canadian head office in Toronto as originally planned. 

David Ian Gray

“Reflecting on such a strong impression in 2015 in Vancouver and Toronto, The Seattle HQ has been trying with limited capital to lay a new foundation for several years now and this appears to be part of a deep focus on fiscal health of the overall business. The ripple effect in this country is that, under duress, US and offshore retail leaders tend to maintain their domestic bases at the expense of Canada, an outpost region. Notably, Nordstrom never followed through on its promise to set up a Canadian based country head office.” 

Gray went on to say, “I have long questioned whether the large department store isn’t an archaic format, at least in Canadian cities, small by global standards, that lack intense concentrations of walkable wealth around a flagship.  However, as a customer, I will be sad to see Nordstrom close here. This will adversely impact employees, malls and adjacent stores, and vendors but be welcomed by Hudson’s Bay, Holt Renfrew and La Maison Simons.”

For weeks prior to the announcement that Nordstrom will be exiting Canada, Retail Insider received numerous tips from insiders about the retailer’s struggles and plans to exit. Sources told Retail Insider that Nordstrom hasn’t been profitable since it entered the Canadian market. One source said that Nordstrom Rack was delaying February deliveries into the later spring, possibly indicating that vendors were being pushed back ahead of an announcement of Nordstrom’s Canadian retreat. 

Thus parts of this article were written well in advance ahead of the anticipated announcement. Given that Nordstrom is a publicly traded company, Retail Insider held off on any speculative reporting in terms of Nordstrom’s future in Canada until the company announced it itself on Thursday. 

We’ll follow up on this story as news arises surrounding Nordstrom’s exit from Canada. Watch for an upcoming Retail Insider podcast where Craig Patterson will discuss the topic further. 

Craig Patterson
Craig Patterson
Located in Toronto, Craig is the Publisher & CEO of Retail Insider Media Ltd. He is also a retail analyst and consultant, Advisor at the University of Alberta School Centre for Cities and Communities in Edmonton, former lawyer and a public speaker. He has studied the Canadian retail landscape for over 25 years and he holds Bachelor of Commerce and Bachelor of Laws Degrees.

13 COMMENTS

  1. “The optics of Nordstrom’s exit will be a black eye on Canada for years.”

    Hardly. They didn’t learn the Target lesson that they can’t provide inferior goods to the Canadian market, in comparison to US, and expect us to be grateful.

  2. Very surprised and sad by this news, especially as a Vancouverite that sees firsthand how successful and profitable the store is, which is substantiated by the sales figure quoted in this article. $300 million/year is almost $1million/day. A shame that the failure of the Toronto and Calgary locations result in the collateral damage and demise of Vancouver’s location. I suppose management is not interested managing only one location in Canada, even if it is a bestseller. Would be nice to see La Maison Simons backfill however. I guess it’s Holt Renfrew, Harry Rosen and monobrand boutiques from here on out. Would not be surprised to hear Saks make a similar announcement unfortunately as well.

  3. Wish list for replacements:

    – Maison Simons
    – Printemps
    – Gallerie Lafayatte
    – Matsuzakaya
    – Fortnum & Mason
    – Daimaru
    – Isetan

    As long as we avoid the nightmare scenario of Jerry Seinfeld threatening to buy NBC and “turn it into the biggest Lane Bryant in Midtown Manhattan” (on an episode of 30 Rock), we can hopefully find some great flagship retailers.

    Also, there’s more than enough space for a proper Uniqlo flagship like the one in Tokyo … just saying.

  4. Well this is very sad news especially for the employees first and foremost. I’m very curious to see how The Eaton Center can repurpose that huge store that divides up both ends of the mall.

    As mentioned in the article hopefully this helps SAKS, Holt Renfew, The Bay & Simons out a little. I’d hate to see any more chains go under.

  5. Unfortunate. Multiple reasons for this — economic and otherwise, but something was obviously off with the launch. Even in their dying days T. Eaton Co. was doing $100s million in sales out of this basically priceless real estate (albeit in a larger footprint). I have personally been in/shopped at 4 of the full-line sites (Toronto Eaton Centre, Rideau Centre, Chinook and Pacific Centre). Toronto was in my view always the most poorly merchandised — Vancouver was always excellent as was Chinook. Rideau was beautiful and clean and on my visits, mostly empty patronage-wise. Most of my shopping was at the Eaton Centre — and it was increasingly obvious that it was being merchandised more as a showroom for online sales than anything else…the men’s shoe selection was pale, and the menswear floor in general was becoming increasingly disorganized with very few salespeople around. I’ve bought a couple of Jack Victor suits (excellent) here as well — there was a notable drop off in the quality of the experience between a sale in 2021 and in 2022. The alterations/tailoring experience was far less fullsome the second time. There was also a layer of dust in the fitting rooms that really took me by surprise in that type of retailer. The place was clearly sliding.

    I’ve been to locations in the U.S. — in Troy, MI for instance — the U.S. stores have this great polished vibe, organized, well-merchandised easy to navigate — that vibe always seemed to be lacking in the Canadian sites (with the exception of Vancouver).

    I think the future of Saks in Canada is an open question — perhaps this move shuffles the deck — maybe HBC was holding out waiting for this shoe to drop (pun intended). Much like the failure of Sears Canada on the low end, the failure of Nordstrom on the high end is probably a moment of sunshine for HBC.

    • I agree Vancouver was most like shopping in a US location, any of the Toronto locations where meh. Shopping at Nordy’s in Minneapolis and central FL for me where always amazing experiences. Wish they had been able to replicate that up here.

  6. This is strong evidence that the upper middle class consumer is disappearing.
    Bring in more dollaramas and giant tigers because that’s what most of this country can afford.

  7. Wow, now this is big news news in Canadian retail, though I’m sure not a surprise to those in the know such as brokers, vendors and retail executives. Another hard lesson for foreign (i.e. mostly U.S. based) companies for whom Canada didn’t turn out to be the gold mine they expected. The best insight was from David Ian Gray: I’ve wondered why the department or large multi-brand format can’t seem to thrive in North America as it does in other places around the world. As Mr. Gray suggested, with the changes in life styles related to suburbanization and the rise of specialty stores and “category-killers”, the specific sort of environment that would support a Selfridge or Galeries Lafayette or a Bloomingdales can only be found in certain high-wealth concentration, high-density walkable cities around the world, and even Toronto in some cases doesn’t quite qualify. At least there’s not enough of that sort of environment in Canada and practically none outside of the three largest CMAs. So it’s good news for HBC, La Maison Simons, and Holt Renfrew and maybe a message to other big names and brands who have a notion to tap the Canadian market: you’d better come correct, and bring a parachute.

  8. Surprised and not surprised at this turn of events. I thought Saks would fold before Nordstroms. Both Sak’s/HBC and Holts will benefit in the long term. I think Simons is a natural for the Eaton Centre and Yorkdale. Not sure they could pull off all three if you include Sherway. In the Ottawa perhaps the Bay should consider moving into the Nordstrom space and if Cadillac Fairview doesn’t already own the Bay building across the street they probably would be the best entity to repurpose that space. The Ottawa downtown Hudson’s Bay store to me has been neglected for years and that space needs to be totally reimagined. Vancouver would be a natural SImons location as well but again that is a lot for them to under take.

  9. If Saks were not struggling, I would think this would be a golden opportunity to fill the Nordstrom space in Vancouver. Apparently, Saks has always wanted a downtown Vancouver location and never opened a store in BC as no downtown real estate was available. With Vancouver’s Nordstrom being very profitable it substantiates a possible move. It would certainly be the easiest transition to accommodate from Cadillac Fariview’s perspective. Nordstrom is leaving money on the table by vacating Vancouver, and the opportunity for Saks to have a profitable location to help supplement their other locations might be tempting. However, this may just be wishful thinking.

  10. Truly sad… but if you ask anyone about “Nordy” … they will probably look at you in wonder. If you say “Optimum” …it instantly resonates. Canadian retail markets are unique and shoppers preferences diverse by province. There’s a market here if you take the time to study those who are winning and elevate.

    • Probably this is the most pin pointed answer to the problem! Canada is vast but not as populated as USA, and investors have to learn to take their time, studying the market that vary so much Province by Province. Moreover, where there is wealth, it does not mean that that wealth will ever spend a penny at Nordstrom….as a fact , because I live in a pretty wealthy community north of Toronto, where people travel two, three times a year to Europe just to renew their wardrobe, from bags to shoes, from coat to swimwear, and those people did not even knew where Nordstrom was.

  11. I don’t think large department stores are something that people shop in now. In the old days, everyone would head to Eatons for almost everything and they would also apply for jobs there when they left high school, many spending their working lives there. When Sears was still open at the Eaton Centre, they had big 60% off sales every two weeks, I used to walk around and see major appliances on sale at 60% off, furniture, housewares, down parkas like Columbia on for half price and no one was shopping there, I couldn’t believe it. Yet the mall was crowded. That’s when you know the department store is finished, it’s a thing of the past. I was surprised when Nordstroms opened, their prices were so outrageous, I don’t know how they stayed open this long. It’s a sad thing to see these big well known businesses vanish into history.

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