Members of the family that founded Nordstrom are rightfully alarmed at the state of financial affairs at the Seattle-based department store chain, and they are in the early stages of hammering out a proposal to increase their roughly one-third stake in the company to more than 50%, according a Wall Street Journal report published yesterday.
Nordstrom, like so many modern department stores, has been ailing for a while—but its sales have really plummeted recently. Sales dropped 3.5% year-over-year in the three-month period ended May 4, and revenue fell 5.1% at its approximately 140 full-priced stores, and less than 1% at its approximately 240 discount locations. The company lowered its earnings outlook for the fiscal year in May. On Wednesday its shares closed at $33.11.
The outlet reported that many on the company’s board aren’t in favor of the family regaining a controlling share: “Some independent directors are wary of allowing the family to take advantage of the stock drop to increase its ownership, when they blame its management for the decline.”
Erik and Peter Nordstrom, grandsons of Nordstrom founder John W. Nordstrom, currently run the company, but the WSJ reports that the board has been looking to replace them. Former co-CEO Blake Nordstrom—who ran the company with brothers Erik and Peter—died of cancer in January at the age of 58.
Of the three brothers, “Blake handled more of the traditional chief-executive duties such as communicating with Wall Street,” according to the Wall Street Journal report, which further detailed that Peter oversees merchandising and has helped build Nordstrom’s designer business, and Erik is in charge of e-commerce “and has been involved in the rapid growth of the retailer’s off-price chain, Nordstrom Rack.”
Unlike other contemporary department stores, Nordstrom has been increasing its brick-and-mortar footprint recently—it’s opening its first-ever New York City store in October at a reported cost of $500 million. The company has also been aggressive in diversifying its portfolio with acquisitions (see HauteLook and Trunk Club) and the rollout of new small-store concept Nordstrom Local.
Top: A Nordstrom storefront (photo courtesy of Nordstrom)
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