Nordstrom family members are considering taking the company bearing their name private, to facilitate restructuring.
According to news agency reports, delisting the business would make it easier to undergo a comprehensive remodelling of the business to help it weather the US-wide slowdown in department store sales, fuelled by rising online shopping. The downside is that it would require raising significant debt to buy out shareholders.
Nordstrom, headquartered in Seattle, has a market value of about US$7.4 billion. Analysts say that at the company’s current share price value of $46, the family would need to raise between $5.45 billion and $8.19 billion of additional debt to fund share repurchases.
One commentator, Jan Rogers Kniffen, CEO of J Rogers Kniffen WWE, a retail consultancy, was positive, however.
“Nordstrom is not highly levered, they have quite a bit in their way of real estate assets so is it probably easier for them to actually get this transaction done,” he said.
Nordstrom family members own 31.2 per cent of the company.
“Because of the changing dynamics in the retail environment, the group is evaluating whether the long-term interests of the issuer (Nordstrom) are better served as a privately held company,” the Nordstrom family members said in a stock exchange filing.
A committee of independent directors has been formed to explore the possibility. No formal offer has been made as yet.