The liquidation sales at Nordstrom stores across Canada will begin Tuesday.
OTTAWA – The Canadian economy lost steam as 2022 drew a close, setting the stage for a continued slowdown this year as high interest rates weigh on spending.
Statistics Canada’s preliminary estimate for real GDP in December indicates the economy neither grew nor contracted, suggesting the economy grew at an annualized rate of 1.6 per cent in the fourth quarter of last year.
In comparison, the economy grew at an annualized rate of 2.9 per cent in the third quarter of 2022.
RBC assistant chief economist Nathan Janzen said the latest GDP report adds more evidence that the economy is indeed losing momentum.
And that trend is expected to continue, he said.
“The key when you look forward is really that a lot of the impact of interest rate increases from the Bank of Canada to date, haven’t yet flowed through fully to household purchasing power.”
Economists said the full effects of interest rate hikes usually takes between 12 months and 18 months to fully work its way through the economy.
Since March, the Bank of Canada has raised its key interest rate eight consecutive times. The central bank said last week that it is taking a conditional pause on any further hikes to the key rate, which now stands at 4.5 per cent, keeping the door open to further increases if inflation isn’t tamed.
The economy, which was roaring in the first half of 2022 as it rebounded from the COVID-19 pandemic, grew by 0.1 per cent in November, the federal agency said Tuesday.
Statistics Canada estimates the economy grew by 3.8 per cent last year.
However, the pace of growth slowed in the second half of the year, coinciding with the Bank of Canada’s aggressive interest rate hikes.
Growth in real domestic product for November was driven by the public sector, transportation and warehousing and finance and insurance.
Statistics Canada’s report notes that the removal of COVID-19 travel restrictions have spurred growth in transportation and warehousing.
Meanwhile, construction, retail and accommodation and food services contracted.
“You’re starting to see more signs of maybe cracks in the consumer spending backdrop,” said Janzen, noting the declines in retail trade and accommodation and food services indicate consumers are pulling back.
The housing market was the first to feel the effects of interest rate hikes, leading to a slowdown in housing-related sectors.
That slowdown is expected to extend to other sectors in the economy and impact employment levels as businesses facing lower sales adjust hiring plans.
Canada’s annual inflation rate has slowed since the summer and reached 6.3 per cent in December. The central bank wants to see the inflation rate fall back to its two per cent target and expects that to happen in 2024.
Looking ahead, many economists are anticipating a mild recession in 2023. However, the economy is expected to recover in the second half of the year.
“We still do expect GDP growth to continue to slow and get into negative territory over the first half of this year,” said Janzen.
This report by The Canadian Press was first published Jan. 31, 2023.
Nordstrom is expected to begin liquidating its stores across Canada today.
The start of the department store chain’s closing sale comes a day after the U.S. retailer’s Canadian branch got permission from the Ontario Superior Court of Justice to start selling off merchandise.
Nordstrom’s liquidation efforts are being led by Hilco Merchant Retail Solutions ULC and Gordon Brothers Canada and are expected to be complete by late June.
Furniture, fixtures and equipment will be liquidated alongside most of Nordstrom’s merchandise, but goods from third parties aren’t part of the sale because they were removed from stores over the weekend.
Nordstrom required court approval to liquidate 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.
As part of the wind down, Nordstrom will close its six Canadian department store locations and seven Nordstrom Rack shops, which sell designer goods at discount prices.
This report by The Canadian Press was first published March 21, 2023.
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The upscale department store chain has a store at the Rideau Centre mall as well as a Nordstrom Rack location at the Ottawa Train Yards shopping centre
The liquidation sales at Nordstrom stores across Canada will begin Tuesday.
A spokesperson for Nordstrom confirmed the impending sales period Monday in an email to The Canadian Press, just after the Ontario Superior Court of Justice gave the U.S. retailer’s Canadian branch permission to start selling off its merchandise.
The upscale department store chain that primarily sells designer apparel, shoes and accessories has six Canadian stores and seven discount Nordstrom Rack locations, including its Rideau Centre location and a Nordstrom Rack at the Ottawa Train Yards shopping centre, which sells merchandise at discounted prices.
When Nordstrom announced the move in early March, it said it expected the 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.”
Nordstrom opened its first Canadian store in Calgary in 2014, followed by the Ottawa store at the Rideau Centre, which occupied the second and third levels of a former Sears location.
The Rideau Centre store has an alterations and tailoring shop and an energy drinks bar. Merchandise ranges from brand name to designer apparel, housewares, furnishings and beauty products, including brands such as Geox shoes, Gucci, Adidas and Adidas by Stella McCartney.
Later on 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 store 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 Canadian saying that the assortment wasn’t the same in Canada that it was in the U.S.,” she said.
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 spendâ¦within that industry.”
At a hearing at Osgoode Hall in Toronto, 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 cooperative manner.”
Nordstrom required court approval to begin the liquidation 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.
With files from Joanne Laucius
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