Nordstrom family mulls privatisation amid retail turmoil

In a strategic move, the founding family of Nordstrom Inc is reportedly exploring the possibility of taking the US department store operator private, Reuters quoted sources familiar with the matter.

This initiative, coming six years after a previous unsuccessful attempt, highlights the challenging landscape faced by retailers in the wake of consumer spending constraints triggered by inflation and high interest rates.

Macy's Inc, another major player in the department store sector, has also found itself in the crosshairs of potential takeover bids.

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The decision-making process involves Nordstrom engaging investment banks Morgan Stanley and Centerview Partners to gauge the interest of private equity firms in a potential deal, as disclosed by sources requesting anonymity due to the confidential nature of the matter.

While discussions are ongoing, there's no assurance that an agreement will be reached.

Both Nordstrom and Morgan Stanley declined to provide comments, while a spokesperson for Centerview did not respond immediately to requests for comment.

Following the news of these developments, Nordstrom's shares experienced a notable surge, climbing by 12 per cent to $19.22 on Tuesday.

This surge elevated the company's market value to $3.2 billion, notwithstanding its existing net debt of approximately $2.3 billion.

Nordstrom, known for its network of over 350 stores alongside robust e-commerce operations, has been a key player in the retail landscape.

Notably, Chief Executive Erik Nordstrom and other family members collectively hold a substantial 30 per cent stake in the Seattle-based company.

Nordstrom's contemplation of going private echoes its previous efforts in 2017 when it formed a special board committee to evaluate a similar proposal by the family.

Back then, the committee explored potential deals with various private equity firms, including Leonard Green.

However, in 2018, the committee rejected an $8.4-billion offer, deeming it inadequate.

Despite past setbacks, the current economic climate, marked by cautious consumer spending, has spurred the family to revisit the idea.

Meanwhile, Ryan Cohen, the billionaire investor and CEO of GameStop Corp, disclosed his acquisition of a 4.2 per cent stake in Nordstrom last year, although he opted not to pursue a board challenge.

As Nordstrom navigates these potential changes, its recent financial outlook has projected annual results below Wall Street expectations, primarily attributed to the impact of price-conscious consumers on revenue.

Nevertheless, Nordstrom Rack, the company's discount chain, has emerged as a bright spot, witnessing expansion with the addition of new stores.

(With inputs from Reuters)