The result sees Nordstrom close all six of its Nordstrom stores in Canada, seven Nordstrom Rack stores and the Nordstrom.ca website.
The move sees 2,500 jobs put at risk.
The management team at Nordstrom explained the decision was part of initiatives to drive long-term profitable growth and enhance shareholder value and comes after “careful consideration of all reasonably available options.”
“We regularly review every aspect of our business to make sure that we are set up for success,” said Erik Nordstrom. “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 want to thank our team for their performance and dedication in serving customers in Canada. This decision will simplify our structure, intensify focus on our growth and profitability goals and position us to create greater value for our shareholders.”
Accordingly, Nordstrom Canada commenced a wind-down of its operations, obtaining an Initial Order from the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (“CCAA”) earlier today to facilitate the winddown in an orderly fashion. Nordstrom Canada 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. The e-commerce platform will cease operations on 2 March 2023. The in-store wind-down is anticipated to be completed by late June 2023.
The company expects that Nordstrom Canada will be deconsolidated from its financial statements as of the date of the CCAA filing.
It expects to report approximately US$300m to $350m of pre-tax charges related to the wind-down in the first quarter of fiscal 2023, driven primarily by the write-down of the company’s investment in Nordstrom Canada. The wind-down is expected to result in an approximately $400m decline in total company net sales and a $35m improvement in total company EBIT in fiscal 2023, relative to fiscal 2022, excluding the aforementioned charges associated with the wind-down.
In October, Nordstrom announced it was cutting 222 jobs in its supply chain as it looked to shift some product volume to other facilities.
Q4 Results in brief
- Net sales fell to $4.2bn from $4.4bn a year earlier.
- Total revenues amounted to $4.3bn from $4.5bn a year earlier
- EBIT was $187m against $299m for the same period last year, primarily due to higher markdowns, partially offset by supply chain expense efficiencies.
- Net income fell to $119m from $200m year-on-year
FY results in brief
- Net sales were US$15.1bn against $14.4bn for the same period last year.
- Revenues rose to $15.5bn from $14.8bn a year earlier.
- EBIT rose to $337m from $246m year-on-year
- Net earnings were $245m from $178m year-on-year.
“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 US 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.”
“While the incremental markdowns in the second half impacted our margins, we are better positioned for a stronger 2023. Our actions have given us increased flexibility to react more quickly to changing customer demand and provide the newness and fashion our customers love,” said Pete Nordstrom, president and chief brand officer of Nordstrom, Inc. “We want to thank our teams for all their hard work helping our customers feel good and look their best.”
Results include a 53rd week and an anticipated impact of the wind-down of Canadian operations
- Revenue decline, including retail sales and credit card revenues, of 4 -6% versus fiscal 2022, including an approximately 250 basis point negative impact from the wind-down of Canadian operations and an approximately 130 basis point positive impact from the 53rd week
- EBIT margin (including the negative impact of charges related to the wind-down of Canadian operations) of 1.2-2.1% of sales
- Adjusted EBIT margin (excluding charges related to the wind-down of Canadian operations) of 3.7-4.2% of sales
- EPS (including the negative impact of charges related to the wind-down of Canadian operations) of $0.20 to $0.80, excluding the impact of share repurchase activity, if any.
- Adjusted EPS (excluding charges related to the wind-down of Canadian operations) of $1.80 to $2.20, excluding the impact of share repurchase activity, if any.