Exploring a Shift, Nordstrom Considers Going Private With New Bid
The Nordstrom family is making another attempt to privatize Nordstrom Inc, a leading U.S. department store chain, six years after their initial bid did not materialize. This effort emerges as the retail sector faces significant hurdles, with Nordstrom among the companies feeling the impact of reduced consumer spending due to inflation and rising interest rates. This climate has also placed Macy’s Inc. under the lens as a potential acquisition target.
Sources reveal that Nordstrom has enlisted the services of Morgan Stanley and Centerview Partners to probe the interest of private equity firms in a buyout deal. However, the discussions are in the preliminary stages, and there’s no guarantee they will culminate in a definitive agreement. Requests for comments from Nordstrom, Centerview, and Morgan Stanley were not immediately returned.
The speculation of Nordstrom going private spurred a 12% increase in its stock price to $19.22, boosting the company’s market valuation to $3.2 billion, notwithstanding its net debt of approximately $2.3 billion.
Nordstrom operates over 350 physical stores alongside its online retail presence. Erik Nordstrom, who serves as the Chief Executive, along with other family members, holds close to a 30% share in the Seattle-based retailer. In 2017, the Nordstrom family bid to take the company private, leading to the formation of a special committee to evaluate the proposal. The committee ultimately rejected an $8.4 billion offer in 2018, deeming it insufficient.
The company recently projected annual earnings that fell short of analyst expectations, indicating the pressures from cost-conscious shoppers. However, its discount division, Nordstrom Rack, has shown promise, expanding its footprint in response to demand.
In a parallel narrative, investment entities Arkhouse Management and Brigade Capital have expressed interest in privatizing Macy’s with a $6.6 billion bid, also proposing changes to its board. While Macy’s has resisted these advances, discussions between the two parties are ongoing.
In another twist, GameStop Corp CEO and billionaire investor Ryan Cohen disclosed a 4.2% stake in Nordstrom last year, though he has not pursued any board action. This new bid to take Nordstrom private marks a pivotal moment for the retailer as it navigates through a transformative period in the U.S. retail landscape.