Nordstrom To Close Canadian Operations; To Cut 2,500 Jobs

(RTTNews) - Department store chain Nordstrom Inc. announced its plans to wind-down Canadian business operations with a view to intensify focus on long-term profitable growth in its core U.S. Business. The company will close all of its stores in the country, and cut around 2,500 jobs.

Nordstrom Canada, which employs around 2,500 people, currently operates six Nordstrom stores and seven Nordstrom Rack stores, as well as the Nordstrom.ca website.

Nordstrom said its Canadian unit intends to wind down its Nordstrom and Nordstrom Rack stores across Canada, with the help of a third-party liquidator, and its Canadian e-commerce platform.

As part of the procedure, Nordstrom Canada has obtained an Initial Order from the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act or CCAA earlier Thursday to facilitate the wind-down in an orderly fashion.

The e-commerce platform ceased operations on March 2, while the in-store wind-down is anticipated to be completed by late June 2023.

Erik Nordstrom, chief executive officer of Nordstrom, said, "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.... We took decisive actions to right-size our inventory as we entered the new year, positioning us for greater agility amidst continuing macroeconomic uncertainty."

The company, which made the announcement while reporting weak earnings and sales in its fourth quarter, said it sees around $300 million to $350 million of pre-tax charges related to the wind-down in the first quarter.

Nordstrom expects the planned wind-down would result in around $400 million decline in fiscal 2023 company net sales

However, the decision would result in a $35 million improvement in total Company EBIT in fiscal 2023, excluding wind-down related charges.

For fiscal 2023, revenue decline, including retail sales and credit card revenues, would be 4.0 to 6.0 percent versus fiscal 2022. The outlook reflects an around 250 basis point negative impact from the wind-down of Canadian operations, partly offset by around 130 basis point positive impact from the 53rd week.

EBIT margin, including the negative impact of wind-down charges, would be 1.2 to 2.1 percent of sales. Adjusted EBIT margin, excluding charges, would be 3.7 to 4.2 percent of sales.

Earnings per share for the year, including Canada charges, would be $0.20 to $0.80, and adjusted earnings per share would be $1.80 to $2.20.

In fiscal 2022, earnings per share were $$1.51, adjusted earnings per share were $1.69, EBIT margin was 3.1 percent, and adjusted EBIT margin was 3.3 percent with net sales of $15.09 billion.