Buyout to Take Nordstrom Private Suspended

Nordstrom Inc. has suspended its efforts to go private after it struggled with getting the financing needed with favorable terms, just another sign the department store industry lost favor with both investors and customers.

The controlling members with the Nordstrom family will renew the review of its overall operations following the upcoming holiday season, Nordstrom announced Monday.

The buyout was set up to help the chain of department stores to continue its efforts of a turnaround outside constant market scrutiny. However, even the prestige of Nordstrom, the upscale department store retailer is considered a stronger company than J.C. Penney, Sears and Macy’s, could not sway enough lenders.

The company along with all employees, in the meantime, will focus on operating the business and giving its customers the best possible shopping experience said Nordstrom through a prepared statement Monday morning.

This announcement caused shares of Nordstrom to fall over 6% in early trading on Wall Street. The stock before the drop was down 11% in 2017 through the end of trading last Friday.

The plan to buyout Nordstrom began this past June, which gave the stock its biggest boost in over eight years. Family members set up a group to evaluate the possible deal, which involved acquiring 100% of the shares outstanding. The board at Nordstrom created a committee that was involved with the buyout idea.

In all, the family owns approximately 30% of the shares of Nordstrom. An analyst in the retail industry estimated that the Nordstrom family had to raise $5.65 billion to $8.19 billion to acquire all the remaining outstanding shares.

However, retail at the brick and mortar level is a difficult sell. While credit in general has continued to be free-flowing for companies amidst a worldwide search for yield, it has been different for the industry that increasingly is coming under more and more distress.

The entire industry of department stores has scrambled to overhaul its operations after many years of sales declines. J.C. Penney, Sears and Macy’s have closed and continue closing hundreds of stores and are attempting to increase their presence and sales online.

Nordstrom has not been quite as hard hit by the downturn. Last August, the company posted an increase of sales at same stores of 1.7%. Analysts predicted that would fall 0.5%.

Nevertheless, Nordstrom has been searching for new ideas as it attempts to freshen up its image. In September, the company announced a concept for a smaller stores that would not carry an inventory, rather customers try clothing on that is delivered.

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