Although luxury sales have been steadily declining recently, the Nordstrom family is persistent about turning its namesake retailer into a family-owned company once again.
Nordstrom has outperformed and defied all odds, while other luxury retailers have suffered the consequences of a crumbling luxury market and struggled to keep up with new shopping trends.
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The past five years have been tough for Nordstrom with its steadily declining stock price, yet the company’s balance sheet has seen steady improvements over the last 12 months.
In its Q2 earnings report for 2024, Nordstrom reported earnings per share of $0.96, compared to the previous quarter’s $0.84, beating analysts’ Q2 average estimate of $0.73 by 31.3%.
CHICAGO, ILLINOIS – MARCH 20: (Photo by Scott Olson/Getty Images)
A Nordstrom family affair
On Wednesday, the Nordstrom family submitted an offer of $3.8 billion to purchase outstanding shares of the luxury third-party retailer in an effort to take the company private.
In the offer, the family and a group of investors are proposing a cash offer of $23 for each common stock.
However, this is not the first time the family has tried to get back its namesake company.
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In 2018, the family proposed an $8.4 billion bid to buy Nordstrom, but the proposal was rejected because the price offered was deemed too low.
The family’s new offer made Wednesday is also not very strong, as it is less than 1% higher than Tuesday’s closing price. This could result in an inadequate price ruling, similar to the one made six years ago.
The Nordstrom family currently has a 33% stake in the company but no majority power over its decisions.
To ensure fairness in the best interests of all parties, Nordstrom formed a special board of directors to evaluate the family’s offer.
This special committee was created in 2018 because of the family’s previous proposal to go private; this group was also responsible for reaching a final outcome in the 2018 bid.
As of Thursday’s closing bell, Nordstrom’s (JWN) stock fell by 0.8%.
Nordstrom joins forces
Although a wealthy family, they decided to acquire more troops and ultimately joined forces with the Latin American version of their namesake company.
The family is not alone in this big transaction; they have partnered with El Puerto de Liverpool, a popular Mexican real estate and luxury department store company.
If the deal were to go through successfully, the Nordstrom family would own 50.1% of the company, and El Puerto de Liverpool would own 49.9%, totaling a combined 100% stake in the company.
In the offer, the family stated that the proposed transaction would be funded by a mix of cash, its already owned 33% stake, and $250 million in bank financing.
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El Puerto de Liverpool (LIVEPOL1.MX) is very similar to Nordstrom; This third-party retail store targets a very similar customer and sells various luxury and brand-name products ranging from apparel to specialty foods.
However, El Puerto de Liverpool is no stranger to the family. In 2022, the Mexican company revealed it had nearly a 10% stake in Nordstrom.
El Puerto de Liverpool is also a publicly traded company, and because of its own struggles, it may be partnering up with Nordstrom to increase its currently declining stock. As of Tuesday’s market open hours, El Puerto de Liverpool’s stock was flat but has declined by 19.73% in the last three months.
The Street contacted Nordstrom and El Puerto de Liverpool for comments, but no immediate response was given.
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