Nordstrom halts Rack expansion into Canada until 2017

Nordstrom has revised expansion plans in Canada, a country known for being tough on U.S. retailers.

The company had planned to roll out Rack stores in Canada in 2015, but Nordstrom told Reuters on Friday that it will halt those plans until 2017. Nordstrom is preparing to open six Canadian department stores. The first will open in Calgary this fall, followed by stores in Ottawa and Vancouver in 2015.

"Given everything on our plate in both the U.S. and Canada and the complexity of it, we thought, let's work on getting the [Canadian] full-line stores up and running to the best of our ability first," Nordstrom spokeswoman Brooke White told Reuters.

The company is looking into how to make distribution in Canada as efficient as possible before the stores are up and running, said White. Nordstrom is pouring $1 billion into technology upgrades for its Canadian unit to ensure its computer systems can handle the demands of the international expansion.  

"We realized that nearly every internal system would need to be altered and that distribution was more complex than we originally anticipated," said Brooke.

This is the second major distribution upgrade that Nordstrom has in the works, following its decision in January to pour $79 million into a new online and catalog distribution center in Pennsylvania. Nordstrom said the new warehouse will enable faster delivery of its online, mobile and catalogue orders for customers on the East Coast.

Nordstrom officially announced its expansion to Canada in September 2012. Since then, U.S. retailers such as Target (NYSE: TGT), Big Lots (NYSE: BIG) and Best Buy (NYSE: BBY) have struggled to stay afloat in Canada largely due to problems with merchandise assortment, understanding customer tastes and product delivery.

Nordstrom Rack stores, which offer discounted merchandise and clearance items from the department stores have been a strong performer for the company. The Rack stores outperformed Nordstrom's full-line stores in 2013, posting same-store sales gains of 2.7 percent compared to a 2.1 percent decline for the full-line stores.

For more:
-See this Reuters article

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