Dive Brief:
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Nordstrom’s board of directors has formed a special committee of “independent and disinterested directors” to “carefully evaluate any proposal from Erik and Pete Nordstrom and any proposals from other parties and consider whether they are in the best interests of Nordstrom and all shareholders,” per a company press release.
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The Nordstrom brothers had notified the board in February of their interest in “potential equity financing for a ‘going private transaction,’” according to a Thursday filing with the U.S. Securities and Exchange Commission.
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Erik Nordstrom, who is CEO, owns 7.45% of the company’s outstanding shares; Pete Nordstrom, who is president and chief brand officer, owns 7.41%; and other family members also own shares.
Dive Insight:
Despite its reputation for stellar customer service, innovation and appealing assortments, Nordstrom hasn’t escaped the troubles that many department stores find themselves in — losing sales and ceding market share.
The retailer in recent years has shrunk its full-line fleet, exiting Canada entirely and opting to shutter 16 stores permanently during the height of the pandemic. In the meantime, it has greatly expanded its off-price Rack business, which many analysts see as volatile and lagging behind stalwarts like TJX and Ross.
“It is no secret that over the past few years Nordstrom has struggled,” GlobalData Managing Director Neil Saunders said in emailed comments. “Against this backdrop, the company value has shrunk, and Nordstrom has come under more pressure from investors. This will have caused pain to the founding family, many of whom still run the company, and seems to have rekindled their desire to take the chain private where they can operate away from the daily scrutiny of markets.”
The family attempted that six years ago, but its offer of $50 per share was rejected by the board as inadequate. At press time, shares are trading for less than $19. Still, it could be difficult to raise the necessary capital given today’s tight market, according to Saunders.
Macy’s recent troubles may also be on the Nordstroms’ minds. That department store has been forced to reckon with investors agitating to unlock value from its real estate, who have offered $6.6 billion to take that department store over. Activist investors swooping onto Nordstrom in a similar fashion “would be an anathema to [the Nordstroms’] general ethos of doing business and by taking the company private they can safeguard its legacy,” Saunders said.
Erik and Pete’s great-grandfather, John W. Nordstrom, launched the business as a shoe store in Seattle in 1901. The company went public in 1971, with “JWN” as its stock ticker. Bringing the company back to firmer family control and out of the public markets could give Nordstrom the breathing room it needs to turn the business around, though taking on too much debt could hamper that, too, Saunders warned.
Reports that the Nordstrom family might want to take the company private surfaced last month, though the company at the time said it wouldn’t comment on rumors or market speculation.
The Nordstroms revealed their intentions while the board was evaluating various possible strategic alternatives that could enhance shareholder value, according to the company’s press release Thursday. The board’s new special committee has hired Morgan Stanley & Co. and Centerview Partners as financial advisors, and Sidley Austin and Perkins Coie as legal counsel.
via https://www.aiupnow.com
Daphne Howland, Khareem Sudlow
