The Nordstrom family will explore possible avenues for taking the high-end department store chain private, the company announced in a press release on Thursday.
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Nordstrom explores going private (JWN)
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The company has not filed any official proposal for going private, and could still decide to remain a public company, but it has retained financial and legal counsel to review its options, Retail Dive reports.
Going private could help the company reform its business around its digital and off-price offerings without having to answer to investors each quarter. Nordstrom has so far avoided mass store closings, unlike Macy’s, JC Penney, and others. In addition, growth in its online sales — which were up 19% year-over-year (YoY) in Q1 2017 — and its off-price Nordstrom Rack stores has helped it perform better in recent quarters than other department store chains.
However, same-store sales for its flagship brand fell nearly 3% YoY in Q1, signaling the company isn't entirely immune to the troubles plaguing its peers. Nordstrom needs to continue to invest heavily in digital and off-price brands to make up for declining traffic and sales at Nordstrom stores, and it would be easier to make those investments without the pressure of the public markets.
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The Nordstrom family would likely need an equity partner if it wants to buy out other investors without adding to the company's debt, The Wall Street Journal reports. Taking on too much debt would limit the company’s ability to make further investments in transforming its business. That means the Nordstrom family would need a partner to contribute capital toward the buyout, or finance the move itself. The likelihood of Nordstrom going private seems to depend heavily on the family's ability to find a partner willing to put up cash and take on a painstaking transformation of Nordstrom’s business that would better position it for the future.
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