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Nordstrom Family Contemplates Going Private with Special Committee
Nordstrom's founding family is considering going private, leading the company's board to create a special committee to assess any potential deal. This decision by CEO Erik Nordstrom and President Pete Nordstrom coincides with a challenging period for department store chains in the U.S., as economic factors are impacting consumer spending habits.
Nordstrom CEO Erik Nordstrom and President Pete Nordstrom are considering taking the renowned U.S. department store chain private. In light of this, Nordstrom's board of directors has set up a special committee comprised of independent and disinterested directors to assess any forthcoming proposals from the executive team or other interested parties. This move was announced in a press release on Thursday, April 18, stating the board's dedication to enhancing shareholder value and its ongoing evaluation of strategic, financial, and operational alternatives in line with the company's strategic plan.
This interest in privatization is not new for the Nordstrom family, who have previously sought to remove the company from the public eye and regain private control. The family had engaged in similar negotiations in 2017, seeking out private equity firms and forming a special committee for a potential buyout. However, in 2018, an offer was ultimately rejected by the committee for being inadequate.
The backdrop to these considerations is a challenging retail environment, particularly for department stores, as consumer spending habits shift due to various economic factors. Despite these obstacles, Nordstrom reported in its latest earnings results a mixed performance across its banners. The premium Nordstrom brand witnessed a 3% decline in net sales year-over-year, while its off-price banner, Nordstrom Rack, saw an impressive 14.6% increase in net sales. Digital sales, however, dipped slightly by 1.7% across the board.
In response to these shifts, CEO Erik Nordstrom outlined a digital-led growth strategy focused on bolstering the Nordstrom banner through digital innovations and personalized customer experiences. A part of this strategy includes the launch of a digital marketplace on Nordstrom.com, set to commence in April, aiming to enhance customer navigation and selection across an expanding product assortment.
The initiative to possibly take the company private stems from the Nordstrom family’s desire to concentrate on long-term growth, without the pressures and distractions of public market expectations. While there is no certainty that the transaction to take Nordstrom private will be completed, the formation of the special committee signifies a serious exploration of this option as a means to potentially invigorate the company’s future strategy and operations.
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