As retailers struggle, Nordstrom may go private
The Nordstrom family is exploring a bid to acquire the department store chain that bears the family name in a deal that would turn the publicly traded company into a private venture to help it navigate the turmoil that has engulfed the retail industry.
The luxury department store retailer said Thursday that sever- al members of the Nordstrom family, including multiple company executives, had formed a group to weigh the potential deal.
The prospect of a deal drove Nordstrom stock up 10.3% Thursday, closing at $44.63, up $4.15 a share.
The possible shake-up comes amid a period of upheaval for department stores, which are facing declining mall traffic as shoppers increasingly buy more merchandise online for home delivery. Some of the nation’s best-known chains, including Sears and JCPenney, have announced hundreds of store closures in recent months.
Meanwhile, the luxury retail sector also is facing obstacles connected to the strong U.S. dollar, which is curbing tourist spending.
Nordstrom first offered its shares to the public in 1971, and sales exceeded $100 million two years later. In the fiscal year ended Jan. 28, Nordstrom’s sales were about $14.5 billion, up 2.9%. Net earnings fell 41% to $354 million. Seattle-based Nordstrom has 122 full-line department stores in North America and 221 Nordstrom Rack stores, which are geared toward Millennials and people seeking high-quality discounted merchandise. About 23% of the company’s business is online, which is up from 5% a decade ago but still puts the company at significant risk as shoppers lose interest in the department store experience.
The prospect of Nordstrom going private represents an acknowledgment that the chain known for outstanding, personal service, although profitable and more stable than much of the department store sector, must reinvent itself.