Nordstrom Family To Buy Namesake Chain

Nordstrom will be acquired by members of the family and El Puerto de Liverpool, a Mexican real estate and department store company that has owned a stake in the retailer since 2022.

“Nordstrom, one of the country’s oldest department stores, said Monday that it would be taken private … reaching an agreement after months of speculation over a potential buyout of the business,” according to The New York Times. “Department stores have struggled to find their footing as e-commerce continues to eat away at their market share. Nordstrom has fared better than its competitors, in part because of its favorable real estate and higher income clientele, but even it has faced challenges. The sale price is well below the $78 a share that Nordstrom fetched in public markets about a decade ago.”

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Including debt, the deal values Nordstrom at $6.25 billion, the company said in a statement. 

“Nordstrom’s founding family tried taking the retailer private in 2018 at $50 per share, but the board said that was too low of a price,” according to CNN Business. “Monday’s announcement marks a stunning decline from the company’s pre-pandemic peak with its stock worth roughly half since then.”

Shareholders will receive $24.25 in cash for each share of Nordstrom common stock. That’s about 42% higher than its closing price on March 18, when news of a potential sale was first reported.

“We think approval of the offer at the increased price is a near-certainty given the board’s approval, high (roughly 43%) ownership of the buyout group, and apparently solid financing,” according to Morningstar. “The only roadblock to closing is the need for approval by most of the independent shareholders, but this appears to be a formality as we are not aware of any opposition.”

While a change in ownership does not automatically remedy all the department store's problems, it will allow the family and their backers to take a long term view of the business and make necessary investments and changes away from the short-term scrutiny of public markets, writes Neil Saunders, managing director of GlobalData, in a note to clients. 

"Nordstrom has, by no means, been one of the weakest performers in the department store space,” Saunders says. “However, neither is it the business that it once was, and a lot of change and investment is needed to remedy recent missteps with merchandising, operations and store standards. The family have the talent and ability to enact change as does El Puerto de Liverpool. They will likely run the business as a retailer rather than as some kind of financial play thing which, in our view, is a very positive thing for the long term health of the brand.”

The announcement comes as retailers and department stores have struggled to retain customers.

"Macy’s this year said it would close 150 stores and shift focus to its luxury brands, including Bluemercury and Bloomingdale’s and its smaller Bloomie’s locations,” according to The Washington Post. “The parent company of Saks Fifth Avenue said in July it would acquire Neiman Marcus for $2.65 billion. Other retailers have turned to bankruptcy court, most recently the Container Store, which filed for Chapter 11 protection in Texas over the weekend as demand wanes for its storage and organization wares.”

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