Reports indicate that the Nordstrom family is considering taking the retailer private in the face of challenges the brick and mortar retail sector is currently undergoing. Members of the Nordstrom family who are said to be exploring the options they have to take the business private include Erik, Peter, and Blake the co-presidents. It also includes founder John Nordstrom’s granddaughter, Anne Gittinger, chairman emeritus Bruce Nordstrom and President James Nordstrom.
“Because of the changing dynamics in the retail environment, the Group is evaluating whether the long-term interests of the Issuer are better served as a privately held company,” read the regulatory filing.
While there has been no official deal made the board of the department store has created a special committee comprised of independent directors who will be charged with evaluating potential offers. The committee of independent directors will also be charged with the responsibility of soliciting proposals from other entities. In a regulatory filing, the Nordstrom family has revealed that they were not considering selling their shareholding nor were they looking to vote on any other option.
Currently, the Nordstrom family owns approximately 51.8 million shares of the department store. This is a little over 31.2% of the retailer’s outstanding stock. With a market value of around $7.5 billion, the Nordstroms would need over $5 billion to acquire the roughly 69% of the firm assuming a premium is not placed on the current share price.
Shifting consumer habits
Just like other department stores such as J.C Penney, Macy’s and Sears, Nordstrom has struggled with slowing sales as consumers increasingly shift their shopping online. According to a Morningstar senior equity analyst Bridget Weishaar, Nordstrom has fared better than its rivals since it has managed to maintain pricing power and consequently generate sales growth figures that are more robust. This is largely because its target consumers are those individuals or households who are looking for value but who will not shy away from spending.
In a research note to clients Weishaar observed that Nordstrom’s target customers are individuals who have the means and are willing to spend more money that they typically would at Kohl’s and Macy’s. At the same time these customers are looking for lower prices than the ones being offered by luxury retailers like Saks Fifth Avenue and Neiman Marcus.
Founded in 1901 as a footwear store, Nordstrom has since grown to have a presence in 40 states in the U.S. Nordstrom also operates stores in Puerto Rico and Canada.