Nordstrom may go private
One of the nation's most successful department store retailers may remove itself from the scrutiny and pressure of Wall Street.
Nordstrom announced that the Nordstrom family – company co-presidents Blake W. Nordstrom, Peter E. Nordstrom, and Erik B. Nordstrom, president of stores James F. Nordstrom, chairman emeritus Bruce A. Nordstrom, and Anne E. Gittinger – have formed an exploratory group to research the possibility of taking the company private. The group has not yet made a formal proposal regarding any such transaction.
The potential deal would involve the acquisition by the group of 100% of the outstanding shares of common stock of Nordstrom. The group owns 51.8 million shares, representing approximately 31.2% of the company’s outstanding stock, it said in a regulatory filing Thursday. Nordstrom's market capitalization is about $6.8 billion.
“The department store business is in plain disruption and it is a highly asset intensive business, and one with rather razor-thin margins. Either you disrupt or you are the disrupted. Nordstrom going private would allow it to massively restructure its business, which is impossible to do as a public company. It is the right move,” said Erich Joachimsthaler, founder and CEO of brand consulting firm Vivaldi.
The news comes as department store companies struggle to find a place in today's changed retail marketplace amid declining mall traffic and online competition. Although Nordstrom's same-store sales fell 0.8% in its recently completed first quarter, its net income rose 37%, and most analysts agree that the company is better positioned than most of its competitors to flourish, even in a disrupted environment.
"Because of the changing dynamics in the retail environment, the group is evaluating whether the long term interests of the issuer (Nordstrom) are better served as a privately held company," the members of the Nordstrom family said in a filing.
Nordstrom's board has formed a special committee (comprised of the independent directors to act on behalf of the company in connection with such exploration by the Nordstrom family and any possible transaction. The committee has retained Centerview Partners LLC to serve as its financial advisor and Sidley Austin LLP to serve as its legal counsel.
Nordstrom currently operates 354 stores in 40 states, including 122 full-line stores in the United States, Canada and Puerto Rico; 221 Nordstrom Rack stores; two Jeffrey boutiques; and two clearance stores. Additionally, customers are served online through Nordstrom.com, Nordstromrack.com and HauteLook. The company also owns Trunk Club, a personalized clothing service serving customers online at TrunkClub.com and at seven stores.