- The Nordstrom family has dropped the possibility of taking the company private for the year, according to a press release.
- The upscale department store retailer said Monday the family members considering the transaction had notified a special committee of the board that they had "suspended active exploration, for the balance of the year, of the possibility of proposing a transaction to take the company private."
- However, the group said they plan to resume exploration of a go-private transaction after the holiday season wraps up, according to Nordstrom. The company offered no assurances that a proposal would come or what its details and terms might consist of.
A possible deal to take Nordstrom private was both a move to shelter the company from Wall Street’s bearish outlook on retail and then a victim of that negativity.
The Nordstrom family group looking to buy the company from public shareholders — which included company co-presidents Blake Nordstrom, Peter Nordstrom and Erik Nordstrom, as well as President of Stores James Nordstrom, Chairman Emeritus Bruce Nordstrom and Anne Gittinge — reportedly ran into trouble finding financial backers for the deal.
In September, reports surfaced that Nordstrom coming was closing in on a deal with private equity firm Leonard Green & Partners to help fund a go-private transaction. But by early October, those talks were said to be "in deep trouble" amid issues with raising financing. Bringing in a private equity partner was in part a way to fund a deal without taking on large amounts of debt with high interest rates attached — the latter a symptom of Wall Street’s darkening view of brick-and-mortar retail in a year of recession-level bankruptcies for the sector.
Members of the Nordstrom family announced in June they were considering taking the company private, though at the time they had filed no proposals and made no promises that it would happen. By late July, the Nordstrom family group was negotiating with potential private equity partners for a possible deal. Erich Joachimsthaler, CEO of growth strategy firm Vivaldi, told Retail Dive at the time of the initial announcement of the family’s interest that going private was a smart play for the company.
"Nordstrom goes private in order to massively restructure its business which is impossible as a public company. It is the right move," Joachimsthaler said. "Either you disrupt or you are the disrupted. As a public company with the asset heaviness of the department store business and low margins, they cannot disrupt. This is the precursor of massive changes in retailing." Mark Cohen, director of retail studies at Columbia University's Graduate School of Business, said of the announcement, "Going private, assuming it did not entail taking on a crushing level of debt, may very well be the best thing that could happen to Nordstrom."
A private restructuring, should it ever come, would likely take Nordstrom three to five years, Howard Davidowitz, chairman of New York City-based retail consulting and investment banking firm Davidowitz & Associates, told Retail Dive earlier this year.
A go-private deal could give Nordstrom a longer timeline to reinvent its business for the modern retail climate. It could also preempt an activist rebellion, such as those some fellow department store chains — including Hudson’s Bay Company, Macy’s and Dillard’s — and other retailers have been fending off.