Nordstrom family prepares proposal to increase stake in retailer

Family seeks to strengthen grip following decline in merchant’s shares

The family behind Nordstrom Inc. is seeking to strengthen its grip on the department-store chain following a decline in its shares that has stoked tension on the board. Members of the founding Nordstrom family are in the early stages of discussing a proposal to boost their roughly one-third stake to over 50%, according to people familiar with the matter. It isn’t clear how the family would increase its stake—one possibility is through a share buyback at a premium, one of the people said—and there is no guarantee it will follow through.

Should they, the family may encounter resistance: Some independent directors are wary of allowing the family to take advantage of the stock drop to increase its ownership when they blame its management for the decline, one of the people said.

The board has been seeking to bring in an outsider to replace the two great-grandsons of the founder, who have been serving as co-presidents, some of the people said.

In 2017, the family attempted to take the company private, offering about $8 billion, or $50 a share, when it was trading at around $40 a share.

But a special committee of the board rejected the offer as too low and the family abandoned the effort early last year.

Since then, the stock has dropped by more than onethird compared with a roughly 19% rise for the S&P 500 Retailing index. Like other retailers, Nordstrom has struggled to remake itself amid rapidly changing shopper habits. Its shares closed Tuesday at $30.69, giving the Seattle-based company a market value of just under $5 billion.

The oldest brother, Blake Nordstrom, died unexpectedly in January at the age of 58, shortly after revealing he had been diagnosed with cancer. He had shared the title of co-president with his brothers Erik and Pete, who now run the company jointly.

Of the three, Blake handled more of the traditional chiefexecutive duties such as communicating with Wall Street. Pete oversees merchandising and has helped build Nordstrom’s designer business. Erik is in charge of e-commerce and has been involved in the rapid growth of the retailer’s off-price chain, Nordstrom Rack. The brothers have spent their entire careers at Nordstrom.

Nordstrom has had only one nonfamily CEO since its founding by John W. Nordstrom, a Swedish immigrant, in 1901: John Whitacre led the company from 1997 until 2000, when he resigned following poor results. Blake Nordstrom succeeded him.

Nordstrom’s sales dropped 3.5% year over year in the three-month period ended May 4. Revenue fell 5.1% at its roughly 140 full-priced stores and less than 1% at its more than 240 discount outlets. The company also lowered its earnings outlook for the fiscal year in May.

Pete Nordstrom has said the company needs to do a better job anticipating the tastes and budgets of its customers, including younger shoppers. While many department stores are shrinking by closing stores or reducing the size of existing locations, Nordstrom has been expanding. It is spending roughly $500 million to gain a toehold in Manhattan, including the planned opening of its first women’s store in the city this fall.

It has snapped up e-commerce companies such as flashsale website HauteLook and subscription service Trunk Club.

It also is opening smaller stores called Nordstrom Local that don’t carry any clothes.

Nordstrom is set to report its second-quarter earnings Aug. 21.