(Corrects paragraph 9 to show Neiman Marcus went private in
2005, not 2013)
By Nandita Bose and Gayathree Ganesan
June 8 Department store operator Nordstrom Inc
said on Thursday that some members of the Nordstrom
family are considering taking the company private as it
struggles with an industry-wide sales slowdown.
Going private, which would involve raising debt, would be a
risky but potentially profitable bet by Nordstrom's founding
family and largest shareholder bloc that the company can reshape
itself and emerge from the retail meltdown stronger.
Shares of the Seattle-based clothing and accessories
retailer were last up 11 percent after having surged as much as
18 percent in their biggest intraday percentage gain since
February 2009. The company now has a market value of about $7.4
The move comes as U.S. malls have been struggling with
slowing customer traffic and as mall anchors like Nordstrom and
Macy's Inc are trying to revive sales.
Nordstrom in May reported first-quarter same-store sales
that fell short of estimates, triggering a drop in its shares.
Shares of other U.S. department store chains also rose after
Nordstrom's announcement. Dillard's Inc gained as much
as 6.3 percent, Macy's rose 3.3 percent and Kohls Corp
climbed 1.3 percent in Thursday morning trading.
Going private may help Nordstrom restructure its business,
which is more difficult as a public company, said Erich
Joachimsthaler, chief executive of Vivaldi, a consulting firm
that works with retail brands. "It's the right move," he said.
The exploration of going private, which could add to the
retailer's debt, comes amid a wave of store closures and
bankruptcies in the retail industry.
High-end department store chain Neiman Marcus, meanwhile,
went private in 2005 and said in March it is exploring options
as it seeks relief from its swelling debt pile.
But going private may be slightly easier for Nordstrom,
"Nordstrom is not highly levered, they have quite a bit in
their way of real estate assets so is it probably easier for
them to actually get this transaction done," said Jan Rogers
Kniffen, chief executive of retail consultancy J. Rogers Kniffen
Founded in 1901 as a shoe store in Seattle, Nordstrom went
public in 1971. The retailer, known for its high-end department
stores and customer service, sells designer items including
Jimmy Choo stilettos and Burberry trench coats.
Nordstrom operates 354 stores in 40 states and owns stores
in Canada and Puerto Rico. It also runs Nordstrom Rack, an
off-price discount clothing and accessories chain.
TAKING IT PRIVATE
In a filing with the U.S. Securities and Exchange
Commission, the department store operator said the group formed
to consider going private had not made a formal proposal.
The group comprises Chairman Emeritus Bruce Nordstrom, his
sister Anne Gittinger, President James Nordstrom and
co-Presidents Blake, Peter and Erik Nordstrom.
The group, which owns 31.2 percent of the company, said it
was not interested in selling its stake to third parties or
voting for an alternative deal.
With the Nordstrom family's share ownership, the odds of a
deal getting done are higher, said Chuck Grom, analyst with
Gordon Haskett. The ownership would appear to satisfy the
requirements of a leveraged buyout transaction, he said.
Grom estimates at a share price of $46, retailer would need
to raise $5.45 billion to $8.19 billion of additional debt to
fund the takeout.
The largest shareholders in the company from the group
include Bruce Nordstrom with 16.9 percent of outstanding shares,
followed by Gittinger with 9.3 percent, according to Thomson
Reuters data. Peter and Blake Nordstrom own about 1.7 percent
"Because of the changing dynamics in the retail environment,
the group is evaluating whether the long-term interests of the
issuer (Nordstrom) are better served as a privately held
company," the members of the Nordstrom family said in a filing.
The company's board has formed a committee of independent
directors to explore the possibility of any transaction that
could be made by the group.
The committee said it had entered into an agreement with the
Nordstrom family members over some standstill provisions that
would prevent them from taking certain actions until Jan. 31,
The special committee has hired Centerview Partners as its
financial adviser and Sidley Austin as legal counsel.
With Thursday’s stock gains, Nordstrom short sellers who had
been having a profitable year took a hit.
With the stock up 11.5 percent in late morning trading, that
had erased about three-quarters of the estimated $186 million
gain on paper in 2017 for Nordstrom short sellers, according to
financial analytics firm S3 Partners.
(Reporting by Nandita Bose in Chicago and Gayathree Ganesan in
Bengaluru; Additional reporting by Lewis Krauskopf in New York
and Siddharth Cavale in Bengaluru; Editing by Bill Rigby and