Nordstrom Inc. (NYSE:JWN) Shares Up Over 10% on Potential Plans to Go Private

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.

US capitol Building and American dollars illustration

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.