By Michael Corkery & Michael J. De La Merced
IN an industry reeling from bankruptcies, vacant storefronts and plummeting sales, Nordstrom is one of the few department store chains to show promise.
The higher-end clothing retailer invested in its e-commerce business early on and was judicious about not opening too many new stores, avoiding many of the pitfalls that are driving other retailers to ruin.
But even from a position of relative strength, Nordstrom is struggling to navigate a broad upending of the retail industry, as shopping malls lose their appeal and more customers choose to buy goods online.
Recently, members of the family that founded Nordstrom in Seattle a century ago—and who still own a substantial portion of its shares—said they were exploring ways to shift the company into private ownership.
The decision signals the Nordstrom family’s commitment to its core retail business at a time when investors and lenders are deserting the industry in droves.
It also reflects optimism that a private equity firm or a sovereign wealth fund would be willing to invest in a large retailer, after many major investors got burned in debt-fueled buyouts that went bust.
“Nordstrom is the best of the breed,” said David Shiffman, a managing director and a head of the retail group at Peter J. Solomon Co., an investment banking advisory firm. “This is not a laggard throwing in the towel.”
By making such a move, Nordstrom would duck the glare of public shareholders and the pressure to constantly produce short-term profits.
“This is a clear signal that the changes that retailers need to make are much more extensive and expensive than public shareholders have the appetite for,” said Joel Bines, a managing director focused on retail at AlixPartners, an advisory firm.
Traditional retailers are in a free fall, as physical stores fade as enjoyable, dynamic places to spend an afternoon. On June 8th, the Canadian company that owns Saks Fifth Avenue and Lord & Taylor said it would cut 2,000 jobs.
Shares in Nordstrom were up 10% that day on the news that a move to private ownership was being considered, giving the company a market value of $7.5 billion.
© 2017 New York Times News Service
Image credits: Suzanne DeChillo/The New York Times