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Canada’s biggest shopping malls scramble for anchor tenants in wake of Nordstrom’s departure



A shopper exits Nordstrom Rack in Toronto on Mar. 3, following news the department store will be closing all Canadian Nordstrom and Nordstrom Rack locations.Tijana Martin/The Globe and Mail

Mall owners across the country are scrambling to replace Nordstrom Inc. JWN-N department stores as anchor tenants, after the U.S. luxury retailer said it will wind down its Canadian operations.

On Thursday, Seattle-based Nordstrom announced it will close all of its 13 outlets in Canada and lay off its 2,500 employees in British Columbia, Alberta and Ontario, just nine years after opening its first Canadian store, in Calgary.

The company filed for creditor protection in Canada and revealed it had invested US$775-million in its stores here, yet never turned a profit on them. It plans to liquidate inventory and close the stores by June.

“Despite our team’s best efforts, including multiple initiatives to improve our outcomes, our Canadian business has not been profitable,” chief executive Erik Nordstrom said in a conference call. “The impact from COVID drove further losses with no realistic path to sustainable profitability.”


Nordstrom lost $95-million in Canada over the past 12 months, on sales of $515-million, according to a court filing. In addition to COVID-19, the company said, high operating costs and a “lack of brand awareness” undermined performance. Nordstrom, founded as a shoe store in 1901, has 350 outlets in North America. Its U.S. stores, many of which include spas and high-end restaurants, are consistently profitable.

The closings of the company’s six Canadian Nordstrom stores and seven Nordstrom Rack discount stores will eliminate anchor tenants in several of the country’s largest malls, including Vancouver’s Pacific Centre, Calgary’s Chinook Centre, Ottawa’s Rideau Centre and Toronto’s Sherway Gardens, Yorkdale and Eaton Centre. Landlords stand to lose rent from Nordstrom – which can legally break leases after filing for creditor protection – and could face requests for rent reductions from other tenants, if customer traffic declines as a result of Nordstrom’s absence.

“Backfilling the larger full-line Nordstrom stores could prove challenging and costly, particularly given the size of the boxes,” real estate analysts at RBC Capital Markets said in a report. Nordstrom is the second major retailer to close down its Canadian operations in as many months, after Bed Bath & Beyond revealed plans in February to shut 65 Canadian stores.

“Retail closures and bankruptcies could rise in the year ahead, particularly as economic traction slips,” the RBC analysts added.

Nordstrom is an anchor tenant in three Cadillac Fairview Corp. Ltd. properties, including the Eaton Centre, the country’s most-visited mall. Cadillac Fairview is owned by the Ontario Teachers’ Pension Plan.

“Cadillac Fairview is constantly assessing the ever-changing retail landscape,” spokesperson Janine Ramparas said on Friday. “While it’s too early to speculate what we will do with these spaces in the future, our team is working diligently to manage this change and work toward an outcome that is in the best interests of our centres and our long-term success.”

Nordstom’s other landlords include Montreal-based Ivanhoé Cambridge, which rents space to two stores; Vancouver’s QuadReal Property Group; and Toronto-based Oxford Properties. All three are also owned by pension plans. On Friday, the companies declined to comment on Nordstrom’s planned departure.

Commercial real estate experts said it will be difficult for the mall owners to find large enough retailers to take over the Nordstrom spaces, especially in places like the Eaton Centre, where the luxury retailer is spread out over large floor plates across multiple levels.

Even before the pandemic started, mall operators and department store chains had been trying to transform their shopping spaces into destinations, to draw online shoppers to physical retail. For example, some malls have developed co-working spaces.

Mall operators have also had to get rid some of their retail space, or convert it for use as schools, housing or places of worship.

Stan Krawitz, a principal with Avison Young, a commercial real estate brokerage, said Nordstrom’s spaces in many malls will likely have to be divided to attract smaller retailers. He said the Nordstrom exit will be a problem for every landlord, but that it would not be “fatal” for highly sought-after malls like the Eaton Centre, Yorkdale and the Pacific Centre.

Some retail analysts have privately wondered whether Saks Fifth Avenue could be next to pull up stakes. The U.S. luxury chain, which is owned by Hudson’s Bay Company Ltd., has three full-line stores in Calgary and Toronto, and 15 lower-priced Saks Off Fifth locations in Canada, along with its more than 80 Bay department stores.

Richard Baker, the American businessman who has controlled HBC since taking it private in early 2020, said the company has no plans to leave Canada, and is looking to expand its investments here.

“It’s not good news for Canada that another high-quality, well-run department store retailer is choosing to leave the country, but it’s an opportunity for Hudson’s Bay and Saks to grow market share in a very difficult market,” Mr. Baker said. He added that the two chains would be looking at picking up some of the vendors that previously worked with Nordstrom.

“Before the pandemic, and straight through, we invested hundreds of millions of dollars in upgrading our digital experience and improving our overall offering of quality and service at Hudson’s Bay and Saks, and we’re going to continue down that road,” he said.

Mr. Baker also took aim at suggestions that weakness in Canada’s luxury-goods market led Nordstrom to exit.

“Nordstrom closing in Canada has nothing to do with the luxury market. It has to do with a prolonged depression in retail sales in the downtowns of Canada that has impacted them more than they could tolerate,” he said. He added that the Bay’s stores in suburban locations and smaller cities have helped HBC weather decreased foot traffic in large Canadian urban cores.

As for the vacant retail spaces Nordstrom is leaving behind in Canadian malls and shopping centres, Mr. Baker said he’s confident landlords will “re-energize them with new and exciting retailers.” Asked if Hudson’s Bay or Saks is interested in moving in, he declined to respond.

Nordstrom has committed up to $25-million to pay employees for working through to store closings in June, including severance, according to court documents. The retailer has also set aside $2.6-million for bonus payments to keep key personnel on the job, including store managers, department heads and security staff.

Nordstrom estimates that about 10 per cent of its employees, or 250 people, will be eligible for the bonus.


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Sharp hike in federal alcohol excise duty will drive up price of booze, Ottawa distilleries and breweries say – Ottawa Citizen



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For Ottawa distilleries and breweries, April 1 each year brings, rather than jokes or pranks, increases in the federal excise duty they must pay. This year, the especially steep hike is no laughing matter.

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The alcohol excise duties imposed on manufacturers are adjusted annually based on inflation. But while booze businesses have coped in recent years with two-per-cent increases, this year’s duty is set to increase 6.3 per cent as of Saturday.

The result, Ottawa distilleries and breweries say, will be more expensive alcoholic beverages for consumers, including restaurants, bars and the general public, as manufacturers who are still coping with pandemic-induced pressures, are forced to recoup the latest additional expenses.

“It’s pretty much a foregone conclusion that prices across the board have to go up. They have to,” says Marc Plante, a co-owner of Stray Dog Brewing Company in Orléans. “It’s not going to be, ‘Boom! Here comes the increase,’ and everyone’s going to see it. It will be slow. It will be subtle.”

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Citing a press secretary for Finance Minister Chrystia Freeland and Canada Revenue Agency figures, the Canadian Press reported that the increased federal excise tax works out to less than a penny on a can of beer and three cents on a 750-mL bottle of wine.

Still, Plante says the beers his micro-brewery makes will be more expensive “eventually,” although he can’t when the hike will happen or how big it will be. Stray Dog, which launched in 2017, has held its prices stable for several years, absorbing increased expenses and even debts incurred during the pandemic, Plante says.

He compares his company’s efforts to cope with COVID-19 to “a death by a thousand cuts.”

“Unfortunately, there’s only so much that small businesses like mine can absorb, and so we have to start passing some of those costs down to the consumers,” he says.

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On a litre of wine, the excise duty rate is increasing to $0.731 from $0.688, or a little over four cents, according to figures provided by the Canada Revenue Agency. For a 750 ml bottle of wine, the increase would be closer to three cents.

Plante says he feels sorry for consumers. “The way inflation is right now, consumers are the ones getting the hits the hardest,” he says. Calling beer “one of the few pleasures in life,” and adds: “When you start pricing that out of people’s wallets, what do they have left?”

He adds that he feels worse for distilleries, who face a tougher tax regimen than do breweries and wineries.

“I would never get into that business,” he says.

The Ontario Spirits Tax is 61.5 per cent on the cost of the goods. Given that, Adam Brierley, founder of Ogham Craft Spirits in Kanata, says that if he tries to recoup the extra 25 cents of excise duty per bottle imposed this year, he’ll be taxed provincially for that effort and need to raise his prices again to break even.

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“On the surface, we’re talking about 25 cents a bottle, but there are ripple effects,” Brierley says. “It’s just another thing that continues to kick the industry while it’s down.”

The increased excise duty hits distillers even as the costs of bottles, labels, grains, botanicals and more are getting more expensive, driving down profit margins, says Brierley, who launched Ogham in late 2021.

He figures that he will maintain the prices of some of his products until the current batch is sold, and then re-assess. The price of upcoming products will increase, he says, giving the example of Ogham’s maple eau de vie, currently priced at $60 but likely to rise by $5 or more due to the excise hike and the increased cost of maple syrup.

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John Criswick, co-founder of Perth-based Top Shelf Distillers, says he intends to hold the line and not raise the price of Top Shelf’s products “for now.”

Still, he faults the increased excise duty for helping to increase liquor prices and, with them, inflation.

Brierley contends that while excise duty increases are pegged to inflation, he would have liked to have seen the federal government freeze the increase at two per cent, as in recent years.

Greg Lipin, a co-founder of North of 7 Distillery on St. Laurent Boulevard, says Canadian craft distillers as a whole want relief from the federal excise regimen, which applies equally to mega-distilleries and to comparatively much smaller operations such as theirs.

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In the U.S., there’s one rate for craft distillers and another for bigger players, “which is what we’re looking for,” Lipin says.

During its decade of being in business, North of 7 has not changed its prices, preferring to absorb tax hikes, Lipin says.

“I haven’t entertained raising the prices of my products. But I will at some point, with these increases,” he says.

Rod Castro, the owner of 10Fourteen and Pubblico Eatery, two Wellington Street West restaurants, said the spike in the excise duty should not be surprising, as it follows on recent reports on the negative impact of alcohol and revised recommendations for alcohol consumption.

Still, he says: “As is usual, the government fails to really show they have a care or have a pulse for small- and medium-sized businesses and burden us as they do the consumer.”

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Twitter source code leaked online: legal filing




Some parts of Twitter’s source code — the fundamental computer code on which the social network runs — were leaked online, the social media company said in a legal filing on Sunday.

According to the legal document, filed with the U.S. District Court of the Northern District of California, Twitter had asked GitHub, an internet hosting service for software development, to take down the code where it was posted. The platform complied and said the content had been disabled, according to the filing. Twitter also asked the court to identify the alleged infringer or infringers who posted Twitter’s source code on systems operated by GitHub without Twitter’s authorization.

Twitter noted in the filing that the postings infringe copyrights held by Twitter.


The leak creates more challenges for billionaire Elon Musk, who bought Twitter last October for US$44 billion and has had massive layoffs since then.

The news was first reported by the New York Times.


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Thousands without power after Ontario windstorm



More than 10,000 customers remain without power in Ontario today after strong winds hit the southern and eastern parts of the province on Saturday.

Hydro One spokeswoman Bianca Teixeira says more than 11,500 customers are without power as of 9:30 a.m.

She says there are more than 300 active outages and utility crews are working to restore power to customers.

The outages stretch from just outside Ottawa to Pembroke, Parry Sound and Kingston and are scattered across the Greater Toronto and Hamilton Area to parts of Niagara and westward to just outside Windsor.


Environment Canada issued wind warnings on Saturday for areas including Kingston, Prince Edward County, Niagara Region, Hamilton, London, Middlesex, Chatham-Kent and Windsor.

The agency said affected areas would experience strong southwesterly winds gusting up to 90 or 100 km/h beginning Saturday evening.

This report by The Canadian Press was first published March 26, 2023.


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