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A day in retail: Alibaba wins on Wall Street, as Nordstrom considers going private

  • Alibaba's shares soared on Thursday after CFO Maggie Wu said total sales could climb by 45 to 49 percent this year, a target that tops analysts' expectations.
  • Nordstrom's stock was also climbing higher, but because the retailer announced it's exploring a "going private" transaction by the Nordstrom family.
  • There's clearly a "free fall happening in retail," Eric Schiffer, chairman of DigitalMarketing.com, told CNBC in an interview.
Alibaba founder Jack Ma at the opening ceremony of the company's new headquarters in Melbourne on Feb 4, 2017
Alibaba
Alibaba founder Jack Ma at the opening ceremony of the company's new headquarters in Melbourne on Feb 4, 2017

It all happened in one day.

Though not directly related, the tale of internet giant Alibaba and that of department store chain Nordstrom portray how the retail landscape is quickly evolving.

Alibaba's shares soared on Thursday after CFO Maggie Wu told a packed audience at the company's investor day that total sales could climb by 45 to 49 percent this year, a target that tops analysts' expectations by 10 percentage points.

"The company will continue building its ecosystem based on data technology with core businesses supported by payment, logistics, data management platform and cloud," Jefferies analyst Jessie Guo wrote in a note to clients.

The internet giant is showing how it can evolve beyond its e-commerce roots by dipping into digital media and entertainment, cross-border e-commerce and even digital marketing, representing additional sources of revenue. And Wall Street is happy about it.

Meantime, Nordstrom's stock was also climbing higher Thursday, but for an entirely different reason. The traditionally brick-and-mortar retailer said it's exploring a "going private" transaction by the Nordstrom family, who formed a special committee to consider such a deal.

"I think this is a clear message that consumers are changing how they operate and that there is a free fall happening in retail," Eric Schiffer, chairman of DigitalMarketing.com, told CNBC in an interview, reflecting on the two companies' narratives.

"It's crippling old brands and hanging over their head in a very threatening way. If you're an e-commerce pure play, you're in a powerful position."

Nordstrom's shareholders have likely been "terrified" by the latest headlines about mall closings and weak same-store sales, and the company's value would erode should it stay as it is today, Schiffer went on. It might be better for the retailer to "deal with the storm privately," he added.

Nordstrom has shown signs of trying to beef up its e-commerce platform and especially its digital version of the off-price Nordstrom Rack nameplate.

During its latest quarter, Nordstrom said its online sales were 24 percent of total net sales for the period, driven by 11 percent growth at Nordstrom.com and 19 percent growth on Nordstromrack.com.

BABA (green) vs. JWN (blue) year-to-date performance

Source: FactSet

With Thursday's gains, shares of Alibaba have climbed more than 60 percent for the year-to-date period, while Nordstrom's stock has fallen about 5 percent.

"For me, this is a natural transition for [Nordstrom]," Kathy Gersch, a former Nordstrom executive and current executive vice president at Kotter International, told CNBC in an interview. "This gives them an opportunity to take a bit longer-term view on what does [restructuring] look like — thinking how we reshape ourselves without market pressures."

Gersch, who led the retailer through M&A deals and helped Nordstrom grow its private-label brands during her time there, said she expects the family's conversations about going private to move quickly from here.

"It's natural, and it should be natural," she went on. "They have to evolve in terms of how their business is operating. They've been making some small inroads but need to do a lot more."

Most retailers today appear to be looking for their so-called sweet spot when it comes to operating both a physical and digital presence.

While some headlines warn of a total retail apocalypse, "We firmly believe the future of retail has a physical component and e-commerce component," KeyBanc Capital Markets analyst Ed Yruma told CNBC.

Amazon opening bookstores and grocery stores, along with Wal-Mart's venture into delivering products, hints at where the future of retail is headed — a healthy mix of everything, Yruma said. "The level of change we're seeing in retail is unprecedented."