Nordstrom Inc. (NYSE:JWN) shares are up over 10% in early morning trade on Thursday, as the company announces plans to explore going private. The plans are a potential change in strategy for the company, as shopping malls continue to struggle to bring in new shoppers.
The Nordstrom family has created a special committee that will investigate the potential privatization of the retailer.
Shares of the company’s stock soared on the news, with the stock moving up as much as 20% before leveling off. A formal proposal has yet to be filed with the Securities and Exchange Commission. The exploratory group considering going private includes the company’s co-presidents, president, and chairman, who all part of the Nordstrom family.
Anne Gittinger is also part of the group. Gittinger is the granddaughter of John Nordstrom, co-founder of the company and owner of a 9.23% stake in Nordstrom. Bruce Nordstrom, Chairman Emeritus, owns a 15.24% stake in the company.
The group owns a combined 31.2% share in the company.
Nordstrom Inc. (NYSE:JWN) Down 1% on Year
Nordstrom shares are down over 1% year-to-date. However, the stock is up 16% in the trailing 12-month period thanks in part to today’s rally.
Nordstrom, a retailer with a predominant presence in malls, is facing slumping sales and lower foot traffic in malls. Recent data from Credit Suisse suggests that 20% – 25% of malls in the country will close their doors in the next five years.
The company has performed better than its peers, with a focus on affluent consumers. Nordstrom Inc. (NYSE:JWN) responded to customers switching to value-oriented goods, with the opening of Nordstrom Rack, an off-price store.
The company’s first quarter sales outpaced expectations, with a beat on earnings and revenue. The company’s same-store sales declined, erasing investor sentiment and causing shares to fall. The potential move to a private company will allow Nordstrom to be more strategic in potential store closures to weather the current retail climate.