With only a few days before reporting Q4 earnings on March 1, the founding family of Nordstrom is finalizing an offer to take the department store private, according to a report from Reuters. Financial details of the offer have not been disclosed.
In January, Nordstrom reported that same-store sales rose 1.2% year-over-year during the 2017 holiday season, while total sales increased by 2.5%. The promising holiday results may be the catalyst for the Nordstrom family’s decision to reopen talks of going private — a campaign that was initially suspended in October 2017.
The founding family group, which owns 31% of the company, had set up a special committee to explore the possibility of taking the company private in June 2017. The family includes company Co-Presidents Blake Nordstrom, Peter Nordstrom and Erik Nordstrom; President of Stores James Nordstrom; Chairman Emeritus Bruce Nordstrom; and Anne Gittinger, the granddaughter of company Co-Founder John W. Nordstrom, and has worked with private equity firm Leonard Green & Partners on a planned buyout.
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The group met with investment banks in early February and is hoping to submit an offer in March, once the banks get approval from their credit committees. Prior to the holiday season, investment banks didn’t want to provide the debt financing to make a $7 billion to $8 billion offer. But since Thanksgiving, Nordstrom’s stock has risen close to 30%, indicating that the banks may feel more confident in providing the financing necessary for the department store to go private.
Nordstrom’s strong holiday season also may give the family assurance that a private buyout would fare better than venture capital takeovers such as those at Toys ‘R’ Us and Neiman Marcus, which saddled each retailer with nearly $5 billion in debt. But convincing banks to pay up will likely hinge on the department store’s Q4 performance.
