Luxury department store chain Nordstrom is reportedly seeking to go private as the retailer has been struggling with decreasing sales and market share.
Nordstrom’s founding family is working with Morgan Stanley and investment bank Centerview Partners to determine if private equity firms have interest in a deal, according to Reuters.
MD of GlobalData Neil Saunders said the company has come under more pressure from investors as its value has been shrinking. The chain has seen decreasing sales and market share as well as shut down its operations in Canada, while its off-price division Nordstrom Rack also underperformed.
“The last time the family tried to take control of the business they struggled to raise the capital needed and their offer was rejected as too low,” Saunders continued.
“This time the company valuation is lower, but capital markets are tighter and the cost of capital is far greater. So, many obstacles remain to a successful execution of a deal.”
The analyst added that a change in ownership will not solve all the problems, but will enable the firm to make investments and take a longer view on how to evolve the proposition.
Earlier this month, Nordstrom posted a 45.3 per cent decline in net earnings to $134 million for FY23, while its net sales dropped 5.8 per cent to $14.22 billion. The firm also forecast a revenue range of 2 per cent decline to 1 per cent growth for this fiscal year.
According to CNBC, Nordstrom’s shares rose 9 per cent on Tuesday thanks to the reports about the retailer trying to go private. Prior to this, the company’s shares had fallen about 7 per cent this year.
