Nordstrom presents Canadian expansion plan

TORONTO - Nordstrom Inc sees the potential for more than a dozen of its Rack shops in Canada, and will start rolling out the lower-priced chain after it opens the first of its namesake department stores in the country during the fall of 2014.

Formally announcing the opening of four Nordstrom stores in Canada, the Seattle-based company's president, Blake Nordstrom, said the northern expansion was "the worst-kept secret."

Years in the making, Nordstrom's first international venture came up against a tight commercial real estate market in Canada.

"There are few retail centers that warrant the kind of investment and the kind of store we have, and so there isn't a plethora of choices," he said later, in an interview.

The company is another in a long list of U.S. retailers moving into Canada, lured by a relatively resilient economy and customers who are often already familiar with U.S. brands.

Nordstrom will open in Calgary's Chinook Centre in the fall of 2014, Ottawa's Rideau Centre and Vancouver's Pacific Centre in the Spring of 2015, and Toronto's Sherway Gardens in the fall of 2016.

All four malls are operated by commercial real estate heavyweight Cadillac Fairview, owned by the Ontario Teachers' Pension Plan.

In Canada, Nordstrom will come up against closely-held luxury department store Holt Renfrew.

The move also comes as Hudson's Bay Company's pushes to move its Canadian business upscale and eyes an initial public offering.

At its flagship chain The Bay, it has been swapping out brands, pushing to improve customer service and hosting high-profile celebrity fashion events at remodeled downtown stores.

RACK IN CANADA

The chain also plans to open lower-priced Rack stores, and the president said he is confident about finding space for the smaller outlets.

"I think in an ideal world we'd get a full-line store open, our first is Calgary, and then shortly thereafter start looking at Racks," he said.

He sees the potential for up to nine full Nordstrom stores and 12 to 15 Racks in Canada.

In August, Nordstrom boosted its profit and sales outlook for the year, helped by sales at Rack, which it plans to expand dramatically in the next four years. It said it was aiming for 230 Rack stores by the end of 2016, up from 110.

The company also plans to have a credit card in the country, but the president said it is too early for specifics.

LUXURY RETAILERS MARCH ON

Despite a sluggish economy, U.S. luxury chains like Nordstrom, Neiman Marcus Group and Saks Inc have outperformed those that cater to middle and lower-income shoppers, as affluent consumers keep spending.

Still, all three companies have been cautious, generally choosing to ramp up outlet chains rather than expand their full-service stores.

In three Canadian cities, Nordstrom will take over former Sears Canada stores, which the department store chain is set to close this fall. In Toronto, Cadillac Fairview will expand its Sherway Gardens.

Nordstrom named Karen McKibbin president of Nordstrom Canada. McKibbin, who has been with Nordstrom for 27 years, was most recently vice president and regional manager of Northern California and Hawaii. She will hire about 1,000 local employees.

Founded in 1901, Nordstrom operates 117 full-line stores and 113 Rack stores in the United States.