Nordstrom reports healthy holiday sales
Nordstrom on Tuesday reported that net sales rose 2.5% and same-store sales rose 1.2% for the nine holiday weeks of November and December ended Dec. 30. The gains reflected an improvement in both Nordstrom full-line and off-price Nordstrom Rack stores as well as growth in e-commerce at Nordstrom.com and Nordstromrack.com/HauteLook, according to a company press release.
By banner, the Nordstrom brand (including U.S. and Canada full-line stores, Nordstrom.com and Trunk Club) saw net sales rise 0.7% and same-store sales rise 1%. At Nordstrom Rack (Rack stores plus Nordstromrack.com/HauteLook), net sales rose 8.2% and same-store sales rose 2.9%.
On Monday, meanwhile, the company also announced that Nordstrom Rack President Karen McKibbin will retire in March, when she will be replaced by Chief Innovation Officer Geevy Thomas, who previously served as president of Nordstrom Rack from 2010 to January 2017.
Nordstrom partook of the holiday retail party this year — joining the likes of Macy's, Kohl's, J.C. Penney and others in reporting holiday sales growth, thanks mostly to its off-price Rack division.
But Nordstrom's announcement Tuesday was notable less for its healthy (if not exactly mind-blowing) holiday results and more for the fact that it reported anything at all. The department store retailer isn't one to release such figures in the New Year — the fact that it did could mean that it hasn't given up on the notion of going private, according to Gordon Haskett analyst Chuck Grom.
"At face value, the comp result is Nordstrom's best of 2017 with an implied [earnings before interest, taxes, depreciation and amortization] flow-through the strongest of the year as well (albeit still down ~20%)," he said in a note to Retail Dive, adding that analysts likely nevertheless expected more from Nordstrom. "The more important question we have is why did Nordstrom pre-announce? Recall, the company rarely pre-announces and with almost two months to go before they report 4Q, we think the news could be an early indication that Nordstrom may be preparing itself to resume discussions to take itself private."
Members of the Nordstrom family announced in June that they were considering taking the company private, though at the time they had filed no proposals and made no promises. A private restructuring 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 last year when the idea first surfaced.
By late July, the Nordstrom family group was negotiating with potential private equity partners for a possible deal. In mid-October, however, they notified a special committee of the board that they had "suspended active exploration, for the balance of the year" and would resume their exploration after the holiday season wrapped up.
The underlying reasons for such a deal remain in place, though. Davidowitz said Nordstrom is "brilliantly" positioned to go private because of the loyalty of their customers, their commitment to customer service, the Nordstrom Rack business (established more than four decades ago) and their "very powerful" online business.
"They have many more Rack stores than they have Nordstrom stores," he said. "Unlike Macy's, who was in bed on sleeping pills when this whole off-price retail took off, Nordstrom did it and is producing superb results. How do you get value for the Nordstrom shareholders as long as Nordstrom Rack is buried? If you want to spin off — Rack might be valued more than the whole Nordstrom — one reason to go private and do a restructuring is you can't do these things when you're a public company because there's too much criticism. You don't have to worry about earnings and you don't have to impress anybody. You do what you have to do and come back."
It's a viable option for a company with funds available and light at the end of the tunnel, Michael Brown, a partner in the retail practice of global strategy and management consulting firm A.T. Kearney, told Retail Dive in an email. Nordstrom's more muted sales and investors' attendant wariness could actually help. "Going private when share prices are low and then public again, after investments have been made and benefits are being realized, can have a positive return for a company doing this," Brown told Retail Dive last year.
- press release via BusinessWire Nordstrom Reports November and December Combined Sales
- press release Nordstrom Rack President Karen McKibbin to Retire
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