Nordstrom confirms it's looking to go private, with founding family interested in deal

By Bill Peters

The department-store chain says it has formed a committee to explore taking the company private

Nordstrom Inc. has formed a special committee of independent directors to explore going private, the company said Thursday - a move that arrives as clothing retailers struggle with subdued demand and pressure from investors for stronger profits.

The department-store chain said its board formed the committee after members of the company's founding family, Chief Executive Erik Nordstrom and President Pete Nordstrom, expressed interest in such a deal.

The executives - both four-decade-plus veterans of the retailer, who combined currently own about 9.5% of the company's outstanding common stock - could seek debt or equity financing to go private or work out another deal, according to a filing on Thursday.

A prior attempt to take Nordstrom (JWN) private failed in 2018. Rival Macy's Inc. (M) earlier this year rejected a bid to be taken private by Arkhouse Management and Brigade Capital Management.

In connection with the potential move to go private announced Thursday, Nordstrom said the committee had retained investment banks Morgan Stanley and Centerview Partners as financial advisers, as well as law firms Sidley Austin and Perkins Coie as legal counsel.

"The special committee will carefully evaluate any proposal from Erik and Pete Nordstrom and any proposals from other parties and consider whether they are in the best interests of Nordstrom and all shareholders," the company said, adding that there was no guarantee of any deal.

Nordstrom shares gained more than 2% after hours on Thursday.

The announcement confirmed reporting earlier in the day by the Wall Street Journal, and by Reuters last month. But Nordstrom has faced questions about whether private-equity firms might be interested in striking a deal to take the company private, as it's searched for ways to keep growing its business in a challenging environment for apparel retailers.

Clothing demand has been weaker over the past two years, as higher prices for more important things, like groceries, have chewed through a greater portion of shoppers' budgets. Retailers have had to cut prices to attract customers, hurting profitability.

When it reported quarterly results last month, Nordstrom warned of a "cautious consumer that is mindful of discretionary purchases in light of inflation, higher interest rates and the resumption of student-loan payments." The chain has exited its business in Canada and tried to lean into its off-price Rack stores and strengthen its online business.

Nordstrom's roots go back to a shoe store that opened in 1901 in Seattle. Around a third of its shares are in the hands of insiders, including Nordstrom family members, according to FactSet data. In recent years, questions have emerged about how long Nordstrom will remain under family stewardship.

Thursday's filing said that a day earlier, due to the health of Bruce Nordstrom, their father, Erik and Peter Nordstrom got shared ownership of several million company common shares by accepting roles as successor trustees to two trusts.

-Bill Peters

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04-18-24 2019ET

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