After months of buyout speculation, Nordstrom has struck a deal. The department store will be acquired by members of the Nordstrom family and El Puerto de Liverpool, a Mexican real estate and department store company. The acquisition will take the retailer private.
Companies go private because it allows them to make operational changes without the scrutiny of shareholders, said Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group.
“A lot of these things can take time. They can cost money,” she said. “And with a stock market that gauges things on a quarterly report card, some of these initiatives don’t get done.”
Nordstrom’s quarterly report cards haven’t been so good. Combine that with its poor valuation and the sheer cost of maintaining public status, and going private? “For struggling retailers, it’s definitely going to be always considered,” said David Swartz, a senior equity analyst at Morningstar.
Often, this move is triggered by private equity deals, and businesses are later sold off for parts. But in this case, Swartz said the Nordstrom family will have a majority ownership stake.
“That means they need to make changes in the business, but they also need to change it in a way that will keep it viable in the long term,” he said.
That change may be investing more in its off-price brand, Nordstrom Rack, he added.
