The Nordstrom family has announced plans to take its namesake department store private. This decision comes amid increasing pressure on traditional department stores from discount chains and online retailers. The deal, valued at $6.25 billion, involves a partnership with the Mexican retail group El Puerto de Liverpool to acquire all outstanding shares of Nordstrom. The transaction is expected to close in the first half of 2025.
"For over a century, Nordstrom has operated with a foundational principle of helping customers feel good and look their best," said Erik Nordstrom, chief executive officer of Nordstrom in a press release. "Today marks an exciting new chapter for the business. On behalf of my family, we look forward to working with our teams to ensure Nordstrom thrives long into the future."
Pete Nordstrom, chief brand officer of Nordstrom added: "Since our founding in 1901, we have been committed to providing our customers with the best possible service – and to improving it every day. We look forward to building on that commitment in this next phase of the Company's evolution."
"Nordstrom is one of the worldwide leaders in department store retailing, and we're thrilled to be investing in a company that has meaningfully shaped the industry for nearly 125 years," said Graciano F. Guichard G., executive chairman of the Board of Directors of Liverpool. "We are honored to partner with the Nordstrom Family and the Company's talented team as they continue to deliver outstanding service to customers."
Deal Details
The Nordstrom family will retain a majority ownership with 50.1% of the company, while El Puerto de Liverpool will hold the remaining 49.9%. Nordstrom’s stock has tumbled 70% since 2015; the family decided to go private because they believe the company is undervalued in the public markets.
Under the terms of the agreement, Nordstrom shareholders will receive $24.25 in cash for each share of common stock they own. This represents a significant premium of about 42% compared to the stock's price in March when rumors of a potential transaction first surfaced.
Post-transaction, Nordstrom's common stock will no longer be listed on public markets, providing the family more flexibility to maneuver and restructure the company away from the pressures of quarterly earnings reports and public scrutiny.
Motivations Behind the Move
Several factors likely contributed to the decision to take Nordstrom private:
- Long-term vision: As a private company, Nordstrom can focus on long-term strategies without the pressure of quarterly earnings reports and public market scrutiny.
- Undervaluation: The Nordstrom family believes the company has been undervalued in public markets, with its stock price declining by 70% since 2015.
- Industry challenges: Department stores have faced significant headwinds recently, including competition from e-commerce giants and off-price retailers.
Evaluating Potential Impacts
While the Nordstrom family’s objective is to revitalize the brand without the constraints of public ownership, the implications are multifaceted. Liverpool’s expertise in the department store sector will bring strategic benefits, potentially enhancing Nordstrom’s operational capabilities and market positioning.
Additionally, the company plans to continue focusing on e-commerce and the off-price Nordstrom Rack business, which has been a relatively strong point even as traditional department stores face intense competition from giants like Walmart, Target, and Amazon.
Looking Forward
Going private may grant Nordstrom the breathing room needed to innovate and adapt without the pressure of shareholder expectations. CEO Erik Nordstrom expressed optimism about the future, stating to CNBC, "Today marks an exciting new phase for the business. On behalf of my family, we look forward to working with our teams to ensure Nordstrom thrives long into the future
With the backing of Liverpool and a clear focus on growth areas like e-commerce, the family hopes to revive Nordstrom's storied legacy while navigating the complexities of modern retail. As the transaction finalizes in the coming months, stakeholders eagerly await to see how the family and Liverpool will steer Nordstrom towards a promising future.
