The Nordstrom family is reportedly working on a proposal to raise its stake in the department store chain to more than half.
According to a Wall Street Journal article that quoted people familiar with the matter, the group, which currently owns 31.2% of the Seattle-based company, is seeks to increase its stake to upwards of 50% in an effort to tighten its grip on the family business.
The news comes a year after talks aimed at taking the retailer private fell through after an initial offer of $50 per share from the Nordstroms was deemed “inadequate” by the department store. In March, the special committee that advised the firm’s board for the potential transaction said that it had terminated discussions with the group — comprised of co-presidents Peter and Erik Nordstrom, the late Blake Nordstrom, president of stores James Nordstrom, chairman emeritus Bruce Nordstrom and sister Anne E. Gittinger.
Despite the failed go-private attempt as well as some unevenness in the department store chain’s business over the past years, Nordstrom had mostly outperformed many of its peers amid a supposed retail apocalypse and wider industry disruption that peaked around 2017. The firm has also been lauded for its innovative concepts and omnichannel savvy, including its buy online, pick up in store (BOPIS) service, revamped loyalty program and experiential store offerings.
More recently, however, the business has struggled to remain in Wall Street’s good graces. Its first-quarter report, released in May, missed expectations and sent its shares down 11%. The company had posted adjusted profits of 23 cents per share on revenues of $3.44 billion, while market watchers had projected 43 cents a share on sales of $3.57 billion. Its same-store sales also tumbled 3.5% percent — much worse than the 0.1% dip anticipated by Wall Street.
The WSJ report also suggested some independent directors are cautious about allowing the Nordstrom family to increase its stake amid a declining share price, with some accusing the management for contributing to the overall business decline and subsequent stock dips. The report added that the board has been looking to replace the company’s co-presidents with an outsider.
In the past six months, Nordstrom shares shed nearly $15, from February’s high of nearly $46. But shares were popping today on the heels of news that the family might up its ownership. At market close, the stock was in the green almost 8% to $33.11.
FN has reached out to Nordstrom for comment.
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