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Nordstrom Joins Other US Companies in Expansion into Canada

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Nordstrom Joins Other US Companies in Expansion into Canada

Nordstrom, Inc. (NYSE:JWN) announced today, their intention to open four stores in Canada. The Seattle based shoe and apparel store will take over Sears Holdings (NASDAQ:SHLD) Canada’s locations in Calgary, Ottawa, and Vancouver. The company will also build a new retail store in Toronto. Nordstrom, who currently has 230 retail stores across the U.S., will outfit the Canadian stores with the same online capabilities that its U.S. stores have.

Nordstrom, Inc. (NYSE:JWN) becomes the latest U.S. retailer to expand business north of the border. In July, Canada’s federal government granted Target Corporation (NYSE:TGT) permission to takeover Zellers Inc. stores across Canada. In return for the federal governments approval, Target was required to invest $3.5 billion dollars in the Canadian stores, hire up to 25,000 people by 2015, as well as agreeing to sell ”uniquely Canadian cultural products.” Several of Target’s main competitors have successfully expanded north, including The Home Depot, Inc. (NYSE:HD), which currently has 180 stores in Canada and Wal-Mart Stores, Inc. (NYSE:WMT), who has numerous stores along with $750 million invested in Canadian expansion.

While these competitors have successfully expanded northward, others, including rival, Lowe’s Company, Inc. (NYSE:LOW), have faced struggles on they’re way to expansion. The company had hoped to take over RONA (TSE:RON), who is the largest distributor and retailer of renovation, hardware, and gardening products in Canada, with approximately 400 stores. However, RONA decided to reject the 1.76 billion proposal that included Lowe’s offer to purchase Rona’s stock for a 22% premium.

The move towards international expansion is due to the increasing profits it brings in. Target estimated in its fourth quarter earnings, that international operation resulted in a seven percent valuation, with the potential for additional growth. According to the Atlanta Black Star, Wal-Mart Stores, Inc. (NYSE:WMT)t’s revenue overseas has seen a 10-time rise compared to its U.S. sales pace. In addition to profits, U.S. retailers also find Canada appealing because of its resilient economy, familiarity with the brands, and stable currency.

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