Thousands of Nordstrom staff members are set to lose their retail jobs. NPR reports the department store brand is closing all Candian stores, leaving 2,500 people out of work. Based in Seattle, the company has six Nordstrom and seven Nordstrom Rack stores in Canada. All will close for good in June. The e-commerce business associated with its Canadian stores will cease operations this month. Erik Nordstrom, the company’s chief executive, says the decision was made due to not seeing a realistic path to profitability for the business in the country. The order to shut down operations came directly from the Ontario Superior Court of Justice under the Companies Creditors Arrangement Act. Nordstrom first revealed its plans to expand to Canada in 2012 and opened its first store two years later in September 2014.
The Seattle Times reported failing profitability has been an issue for the company as of lately. “This decision will simplify our structure, intensify focus on our growth and profitability goals and position us to create greater value for our shareholders,” Erik Nordstrom said in the statement. “Despite our team’s best efforts, including multiple initiatives to improve our outcomes, our Canadian business has not been profitable.”
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Nordstrom Canada represents less than 3% of the total sales of the company. A $400 million decline in total net sales due to leaving Canada is expected. Inventory levels have also been a major problem in addition to the overall increase in e-commerce businesses that traditional retailers are up against.
“The biggest factor in our promotions has to do with our own inventory levels. So you saw it increased markdown level in the fourth quarter for us, and that was largely our own doing,” Erik Nordstrom added.
The U.S. is also struggling. Its 335 in the U.S. have struggled, particularly with its less expensive business alternative offered with Nordstrom Rack. To assist with the issue, the company will now focus more strategically on offering more merchandise from brands its customers purchase the most.
