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Nordstrom shares spike after company announces exploration of going private

  • Nordstrom says it's exploring a "going private" transaction by the company's family after forming a special committee to consider such a deal.
  • Nordstrom's move comes at a time when malls are struggling to draw shoppers.

Nordstrom said Thursday it's exploring a "going private" transaction by the Nordstrom family after forming a special committee to consider such a deal.

Shares of the retailer's stock soared more than 20 percent at one point Thursday morning following the news. By midmorning, it was up 10 percent.

In a filing with the Securities and Exchange Commission, the department store operator said the group has not yet made a formal proposal regarding a potential private transaction.

Nordstrom did not immediately respond to an additional request for comment.

The retailer explained that Co-Presidents Blake Nordstrom, Peter Nordstrom and Erik Nordstrom, along with President of Stores James Nordstrom and Chairman Emeritus Bruce Nordstrom, and Anne Gittinger, are a part of the recently formed exploratory group.

The largest insider shareholders in the company include Bruce Nordstrom, with a 15.24 percent stake; Gittinger, co-founder John Nordstorm's granddaughter, with a 9.23 percent stake; Blake Nordstrom, who owns 1.58 percent of shares; and Peter Nordstrom and Erik Nordstrom, who both own 1.55 percent of shares, according to FactSet.

The family has filed with the SEC to say that as of Wednesday, on a combined basis, they own 51.8 million shares of the retailer's common stock, representing about a 31.2 percent stake.

The company also said Thursday it has retained Centerview Partners to serve as its financial advisor and Sidley Austin as legal counsel.

JWN 12-month performance 

Source: FactSet

With Thursday's gains, shares of Nordstrom's stock have climbed about 16 percent over the past 12 months, but the stock is still down a little more than 1 percent for the year-to-date period.

The future of malls

Nordstrom's announcement comes at a time when malls are struggling to draw shoppers to its locations.

Amid the latest round of store closures and mounting retail job losses, Credit Suisse has made a gloomy forecast, which predicts that some 20 to 25 percent of all malls over the next five years will close their doors for good.

With brick-and-mortar locations underperforming across many brands, digital players are gaining market share, Credit Suisse analyst Christian Buss explained in a note describing retail's "tumultuous 12 months."

Disappointing sales from rivals such as Macy's, J.C. Penney and Sears have only added to the negative headlines.

Nordstrom has fared better than some because it caters to more affluent customers, who tend to be a bit less price sensitive. It also was quick to identify that more value-oriented customers were shifting to off-price stores like TJX's TJ Maxx and it responded by unveiling its own off-price store Nordstrom Rack.

Earlier this year, Nordstrom's earnings and revenue topped analysts' estimates for the first quarter, but the company's shares tumbled on a same-store sales miss.

Also, while many of its peers have been shuttering brick-and-mortar locations, Nordstrom's real estate portfolio has been much leaner, leaving the business with more flexibility to tweak its store footprint more gradually.

Investors hadn't been anticipating any major store closures from Nordstrom anytime soon.

But Thursday's news suggests Nordstrom's management may want to be more strategic in its response to the current retail climate. As a private entity, the company wouldn't have to worry as much about quarter to quarter trends.