Why Nordstrom, Inc. Stock Gained 14% Last Month
Shares of Nordstrom, Inc. (NYSE: JWN) surged last month after the department-store chain's founding family announced a plan to take the retailer private. According to data from S&P Global Market Intelligence, the stock finished up 14%.
As the chart below shows, the stock spiked over two days as news broke about the company going private.
The stock jumped 10% on June 8 after the company said that some members of the Nordstrom family were considering taking the company private as the stock has been buffeted by a decline in the department-store industry and general worries about retailers. A deal to go private would likely involve raising debt and could include partners outside the family.
Investors unsurprisingly responded by sending the stock surging, as news of a potential buyout almost always leads to a stock pop since the buyers would have to pay a premium for shares. But later in the month, the stock dipped briefly after Amazon.com revealed Prime Wardrobe, a service that offers a box of clothes with free returns -- but Nordstrom shares quickly recovered.
Nordstrom has fared better than its department-store peers as it continues to expand its off-price Nordstrom Rack brand, and online sales have been growing quickly. However, comparable sales at its full-line stores continue to fall by mid-single digits, weighing on the company's overall performance.
It's unclear what the Nordstrom family's plans will be if they're able to take over the company, but their interest alone signals a belief that the stock is undervalued. Going private also allows managers to more easily make changes outside the watchful eye of shareholders and without having to report quarterly results.
Since news first broke of the family's interest, there's yet to be an update, so it's unclear if the buyout will actually come to fruition.
10 stocks we like better than NordstromWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Nordstrom wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of June 5, 2017
Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends AMZN. The Motley Fool recommends Nordstrom. The Motley Fool has a disclosure policy.