Coverage: Nordstrom family considers taking retailer private

Members of the Nordstrom family said Thursday they’re considering taking the Seattle-based fashion retailer private.

Janet I. Tu of the Seattle Times had the news:

The company’s board of directors has formed a special committee of its independent members to consider any possible transaction.

The move comes at a time when retailers generally are struggling to cope with consumers’ growing penchant for shopping online, as well as general shifts in what they’re spending their money on. Nordstrom has done better than most retailers in adapting, but sales at its big mainline stores have suffered.

The Nordstrom family members — company Co-Presidents Blake Nordstrom, Peter Nordstrom and Erik Nordstrom; President of Stores James Nordstrom; Chairman Emeritus Bruce Nordstrom; and Anne Gittinger, granddaughter of Nordstrom co-founder John W. Nordstrom — have not made any proposal yet, the company said.

The group owns 51.8 million shares, representing about 31.2 percent of the company’s outstanding stock, it said in a regulatory filing Thursday.

Lauren Thomas of CNBC.com reported that the company’s stock rose by as much as 20 percent after the news:

Shares of the retailer’s stock soared more than 20 percent at one point Thursday morning following the news. By midmorning, it was up 10 percent.

In a filing with the Securities and Exchange Commission, the department store operator said the group has not yet made a formal proposal regarding a potential private transaction.

Nordstrom did not immediately respond to an additional request for comment.

The retailer explained that Co-Presidents Blake Nordstrom, Peter Nordstrom and Erik Nordstrom, along with President of Stores James Nordstrom and Chairman Emeritus Bruce Nordstrom, and Anne Gittinger, are a part of the recently formed exploratory group.

The largest insider shareholders in the company include Bruce Nordstrom, with a 15.24 percent stake; Gittinger, co-founder John Nordstorm’s granddaughter, with a 9.23 percent stake; Blake Nordstrom, who owns 1.58 percent of shares; and Peter Nordstrom and Erik Nordstrom, who both own 1.55 percent of shares, according to FactSet.

The family has filed with the SEC to say that as of Wednesday, on a combined basis, they own 51.8 million shares of the retailer’s common stock, representing about a 31.2 percent stake.

Nathan Bomey of USA Today focused on the problems of department stores:

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. Escaping the wrath of shareholders who demand strong quarterly results is a major benefit of private ownership.

“There’s no doubt that retail will be, for the foreseeable future, undergoing dramatic transformation, and that’s very difficult to do in a publicly traded environment,” said Greg Portell, lead partner in the retail practice of consulting firm A.T. Kearney. “It’s not unlike being an awkward teenager: Nobody enjoys their teenage years because everything’s changing, and to do that in the public eye is very difficult and in many ways counterproductive.”

U.S. department-store sales fell 37.8% to $156.9 billion from 2006 to 2016, according to retail trade publication The Robin Report.