Nordstrom delaying Rack store openings in Canada until 2017

March 21 Fri Mar 21, 2014 1:19pm EDT

March 21 (Reuters) - Nordstrom Inc is postponing the opening of its discount Rack stores in Canada until 2017, to focus on the launch of its full-line department stores there, its first department stores abroad.

The Seattle-based upscale retailer had initially planned to start opening Rack stores in Canada next year. But Nordstrom said on Friday it has its hands full preparing to open six Canadian department stores, starting with a location in Calgary this autumn, and with a five-year, $1 billion technology upgrade.

"Given everything on our plate in both the U.S. and Canada and the complexity of it, we thought, let's work on getting the (Canadian) full-line stores up and running to the best of our ability first," Nordstrom spokeswoman Brooke White told Reuters.

Nordstrom said altering its computer systems and distribution for its first international expansion was proving to be more complex than expected, despite the similarities between the U.S. and Canadian markets.

The change in plans for Nordstrom comes soon after discount retailer Target Corp reported a nearly $1 billion (U.S.) operating loss in Canada for 2013, with more losses forecast this year after a bungled entry there.

Rack stores, which offer lower-priced designer merchandise made specifically for the chain as well as clearance items from the Nordstrom stores, have been key to Nordstrom's results. Comparable sales at Rack rose 2.7 percent last year, compared with a 2.1 percent decrease at the full-line stores.

Nordstrom estimates there is room for as many as 20 Rack stores in Canada and 10 full-line department stores.

Nordstrom will face competition from fellow U.S. luxury chain Saks Fifth Avenue, which will open a store in downtown Toronto next year. Saks is part of Hudson's Bay Co.

The news of the Rack store delays was first reported by the Globe and Mail. (Reporting by Phil Wahba in New York; Editing by Leslie Adler)

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