In a bid to get better flexibility and to give the brand the agility it needs to undertake some major changes, Nordstrom may be opting to go private. There is little doubt that some big changes have to be made to the company fundamentally to keep its head above water and this may just be it, says market analysts.
Brand has hinted at this before
Nordstrom's stock has not been faring well at all in the recent times and this is one of the major reasons why the company has been looking at other options to sustain itself. With the private deal, it is expected that the company will finally make good on the promise that it has been making since June. Soon after the news of the potential deal being imminent broke out, the stock of the company posted a hike of 5%. The hope is that going private will help the company take steps to carry out some massive internal restructuring that may otherwise be stumped by investors.
It is believed that the Nordstrom family will be associating with Leonard Green and Partners, to carry out the deal. The former owns slightly over 31% of the company now and it is expected that the private equity firm will be funding the deal to the tune of some $1 billion to make the company a private enterprise.
Retailers under pressure
It is not just an isolated case with Nordstrom facing trouble. Retailers across the country have been under pressure for a while now mainly because of the advent and huge popularity of online retailers like Amazon. The success of these virtual retailers has come at the cost of those traditional ones like Nordstrom. Over the past three years, Nordstrom has been facing some drastic erosion of its EPS figures, with a 40% reduction indicating how badly things have been going for the brand. Shopping malls have been closing down in many parts of the U.S., another clear indicator of how the online shopping culture has spelled the death knell for brick and mortar brands. A Credit Suisse report released this year predicts that a quarter of the remaining malls will shut shop over the coming five-year period. Many mall retailers may take a leaf from Nordstrom's books and go private themselves in the near future, say analysts and this may well be the smart move for them to make too.