Nordstrom shares spike as family explores deal to take retailer private

By Markets FOXBusiness

(Reuters)

Nordstrom announced Thursday members of its namesake family have formed a special committee to explore the possibility of taking the department-store company private by acquiring 100% of its outstanding shares of common stock. 

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The proposal has not been made to the company regarding such a transaction, and there’s no guarantee such a deal would be agreed upon.

The committee, made up of independent directors, has hired Centerview Partners as its financial advisers and Sidley Austin as legal counsel in the exploration process. 

Nordstrom shares, which have plunged more than 15% so far this year, surged more than 16% to about $47 on the heels of the announcement. The news helped propel shares of other department store names, including Dillards (DDS), Macy’s (M), Kohl’s (KSS), and Target (TGT) higher.

The company’s same-store sales have declined in four of the last six quarters, and in its first-quarter results said it expected full-year earnings to come in between $2.75 and $3 alongside a 3% to 4% increase in net sales. What’s more, the company said online sales made up about 24% of total sales as it saw 11% growth at Nordstrom.com and a 19% increase at its Nordstrom Rack site.

Traditional retailers have faced intense pressure this year amid growing competition from online retailers like Amazon (AMZN) that have changed the way consumers shop. Those bricks-and-mortar first brands have been forced to quickly adapt to the new landscape as they trim workforces, store footprints, and outline new plans to lure customers in the doors.

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On Monday at its annual shareholder meeting and in an effort to quell investor unease, Macy’s executives unveiled details of a strategy shift. But it was a lowered outlook on gross margins that instead sent shares plunging as investors grew wearier of the department-store behemoth’s ability to swiftly swing to higher comparable-store sales growth – a key metric for retail success.

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