Nordstrom Canada will launch sales at its closing stores starting Tuesday

The liquidation sales at Nordstrom stores across Canada will begin Tuesday, a spokesperson for the department store chain confirmed in an email to CBC News.

At a hearing at Osgoode Hall in Toronto on Monday, the Ontario Superior Court of Justice gave the U.S. retailer's Canadian branch permission to start liquidating its merchandise.

Lawyer Jeremy Dacks, who represented Nordstrom, said the company has "worked hard to achieve a consensual path forward" with landlords, suppliers and a court-appointed monitor to find an orderly way to wind down the business.

The monitor, Alvarez & Marsal Canada, suggested five potential third-party liquidators and Nordstrom was approached by another five. The company decided to go with a joint venture comprised of Hilco Merchant Retail Solutions ULC and Gordon Brothers Canada, which were involved in the liquidation of Target, Sears and Forever 21 in Canada, Dacks said.

They will oversee the sale of merchandise, furniture, fixtures and equipment, but not goods from third parties, which removed products this past weekend, Dacks said. He added that all sales will be final and no returns will be allowed.

Lawyers for Nordstrom landlords Cadillac Fairview, Ivanhoe Cambridge, Oxford Properties Ltd. and First Capital Realty testified Monday that they were pleased with how "smoothly" and "organized" the process has gone so far.

In approving Dacks' liquidation request, Chief Justice Geoffrey Morawetz agreed, saying Nordstrom is facing a "difficult time, but this process is unfolding in a very co-operative manner."

LISTEN | A retail analyst on Nordstrom Canada shuttering its stores:

Nordstrom required court approval because it is winding down its Canadian operations under the Companies' Creditors Arrangement Act, which helps insolvent businesses restructure or end operations in an orderly fashion.

Nordstrom will close its six Canadian department store locations and seven Nordstrom Rack shops, which sell designer goods at discount prices, as part of the wind down.

When Nordstrom announced the move in early March, it said it expected Canadian stores to close by late June and 2,500 workers to lose their jobs.

The company initiated the exit from the market because chief executive Erik Nordstrom said, "despite our best efforts, we do not see a realistic path to profitability for the Canadian business."

Profitability troubles

Nordstrom, an upscale department store chain that primarily sellsdesigner apparel, shoes and accessories, first set its sights on Canada in 2012, opening its first store in Calgary at CF Chinook Centre in September 2014.

Its Canadian presence grew in the years since with massive stores that took up hundreds of thousands of square feet at CF Rideau Centre in Ottawa, CF Pacific Centre in Vancouver, Yorkdale Shopping Centre and CF Sherway Gardens in Toronto.

Then came Nordstrom Rack, which made its Canadian debut in 2018 at Vaughan Mills, a mall north of Toronto. At the time, Nordstrom said as many as 15 more Rack locations could follow.

Nordstrom promised each Rack would deliver savings of up to 70 per cent on apparel, accessories, home, beauty and travel items from 38 of the top 50 brands sold in its Canadian department stores.

Nordstrom had trouble with profitability because of its selection of products and the COVID-19 pandemic, said Tamara Szames, executive director and industry adviser of Canadian retail at the NPD Group research firm, a day after Nordstrom announced its exit.

"You would hear a lot of Canadians saying that the assortment wasn't the same in Canada that it was in the U.S.," she said.

WATCH | Are big department stores doomed in Canada?

Is Nordstroms failure a sign of things to come?

2 years ago

Duration 2:00

Nordstrom says its decision to leave Canada was purely financial, but some retail analysts think the U.S. luxury department store chain's failure actually signals bigger problems in the Canadian retail market. Some even suggest the days of the big department store could be numbered.

She noticed Nordstrom started to shift its product mix away from some luxury brands around 2018 and saw it as a sign that the retailer was struggling to maintain its original vision and integrity.

The pandemic made matters worse because many stores were forced to temporarily close their doors to quell the virus and shoppers were less likely to need some of the items Nordstrom sells like dressy apparel because events had been cancelled.

Despite stores reopening and many sectors rebounding, Szames said the apparel business is the only industry NPD Group tracks that has yet to recover from the health crisis.

"The consumer has really been holding back in terms of spendingwithin that industry."