Nordstrom Brothers Consider Going Private Again

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Erik Nordstrom, CEO, and Pete Nordstrom, President and Chief Brand Officer of Nordstrom, are revisiting the idea of taking their family’s retail empire private. The brothers have initiated formal action by appointing a special committee to evaluate their offer, as well as any competing bids from other parties.

This isn’t the first time the Nordstrom brothers have considered going private, with a previous attempt made in 2017. Now, amid significant changes in the retail landscape and challenges faced by the company, they are exploring this option once again.

Nordstrom, which went public on NASDAQ in 1971 before transitioning to the NYSE in 1999, has seen its fair share of ups and downs. Originally established as a shoe company, it later ventured into selling fashion merchandise. However, recent management seems to overlook the importance of the company’s history of exceptional customer service.

The Nordstrom Rack stores, a growing segment of the business with 260 stores currently in operation and plans for an additional 26 units this year, seem to be driving growth. In contrast, the main Nordstrom stores and local service hubs are fewer in number and face challenges in finding their distinct identity. With competitors like TJX boasting a robust buying team of 1,200 people, the Rack stores are at a disadvantage when it comes to sourcing value merchandise.

To navigate this complex situation, Nordstrom’s board of directors has enlisted the expertise of financial advisors Morgan Stanley and Centerview Partners, along with legal counsel Sidley Austin LLP and Perkins Cole LLP. However, management has made it clear that there’s no guarantee any transaction will be pursued or completed.

Currently, the Nordstrom brothers collectively own approximately 9.52% of the company’s outstanding shares, with the entire family holding around 30% of the stock. Street analysts believe that after the committee completes its evaluation process, the company is likely to go private, allowing senior management more autonomy without shareholder oversight. As the retail industry continues to evolve, this move could signal a new chapter for Nordstrom as it seeks to adapt and thrive in a changing market.