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Nordstrom Confirms Buyout Proposal Valued at $3.8 billion
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Nordstrom, Inc. (JWN - Free Report) has been making progress on its customer-based strategy. It is focused on driving Nordstrom banner growth, optimizing operations and building momentum at the Rack banner. In the latest development, its special committee of the board of directors said that it had received a proposal from Erik and Pete Nordstrom, members of the Nordstrom family, along with El Puerto de Liverpool (Liverpool), to buy the entire outstanding shares of the company, except shares held by them. This $3.8-billion buyout offer looks to take the fashion retailer private.
Let’s delve deeper.
Details on Nordstrom’s Buyout Proposal
This buyout proposal offer is equivalent to $23 per share in cash, reflecting a slight premium to Wednesday’s closing stock price. Erik and Peter Nordstrom, the great-grandsons of founder John Nordstrom and present executives of the company, notified that the merger consideration will be funded through rollover equity, cash and $250 million of new bank financing. This leaves the current indebtedness to remain outstanding.
We note that the Nordstrom family has a 33.4% stake in the company. Liverpool, which is a Mexico-based department store chain, owns roughly 10% of Nordstrom’s shares, per the regulatory filing. On a combined basis, the group has a stake of approximately 43% of shares, according to the filing.
Comprising independent and disinterested directors, the special committee was made with respect to the potential buyout proposal. Post the buyout proposal, the special committee, along with the other independent directors, will prudently review the proposal, making consultations with the independent financial and legal advisors to evaluate the course of action in the best interests of the company and its shareholders.
However, the company’s shareholders need not take any action for the time being. Also, there’s no assurance that this proposed offer will be approved or consummated. The company has no intention to reveal any other developments on this matter unless further necessary disclosures are made.
The latest buyout offer comes as no surprise. In 2018 too, the Nordstrom family made a buyout proposal to take the company private.
How is Nordstrom Performing Now?
In late August, Nordstrom posted its second-quarter fiscal 2024 results, wherein both the bottom and top lines beat the Zacks Consensus Estimate and improved year over year. The company posted adjusted earnings of 96 cents a share, which surpassed the consensus estimate of 74 cents and improved from 84 cents in the year-ago period.
Total revenues of $3.9 billion also rose 3.2% year over year. Top-performing categories during the quarter included active, women’s apparel, beauty and kids. Digital sales grew 6.2% year over year, accounting for 37% of the total quarterly sales. The timing shift of the anniversary sale contributed about 100 basis points to the increase in digital sales.
The company’s Rack banner has been doing well for a while. It is on track to increase productivity throughout its network, lower transportation costs, reduce delivery times and enhance services via faster delivery. The company continues focusing on introducing more premium brands at Rack, better assortment and increased brand awareness. It witnessed an improvement in the Nordstrom Rack banner, driven by strategic brand penetration. Sales at the Nordstrom Rack banner advanced 8.8% to $1.3 billion while comparable sales rose 4.1% in the fiscal second quarter.
The Rack banner's digital channel is a differentiator to the off-price retail, allowing customers to shop whenever and however they want. The company has been expanding its merchandise offering of brands at reasonable prices along with a focus on in-stock rates. In the fiscal second quarter, its private brands posted mid-single-digit growth during the anniversary sale, with the Nordstrom brand and Zella being the top volume brands of the event.
The company has made the strategic decision to change how it stores and accesses data. This transformational change will improve data access and analysis capabilities, hence enhancing the ability to leverage generative AI solutions and services at a higher pace. This transformation is likely to be completed by the end of the year.
What’s More for Nordstrom?
It is yet to be seen whether Nordstrom will accept this buyout proposal in the future. For now, JWN stock is performing well on the bourses.
Image Source: Zacks Investment Research
Over the past six months, shares of this Zacks Rank #1 (Strong Buy) company have gained 33.5% against the industry’s 3.3% decline. Nordstrom remains focused on its long-term strategy, which builds on its market strategy to capitalize on its digital-first platform to better serve customers, gain market share and deliver profitable growth. For this, it is focused on winning in the most important markets, expanding the reach of Nordstrom Rack and enhancing its digital velocity. Hence, the retailer will continue performing well ahead based on the aforesaid catalysts.
The company has a trailing four-quarter earnings surprise of 7.1%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and earnings per share indicates growth of 10.7% and 8.9%, respectively, from the year-ago figures.
Abercrombie, a leading casual apparel retailer, currently sports a Zacks Rank of 1. ANF delivered an earnings surprise of 28.9% in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie’s current financial-year sales indicates growth of 11.5% from the year-ago figure.
Deckers, a footwear and accessories dealer, currently carries a Zacks Rank #2 (Buy). DECK delivered an average earnings surprise of 47.2% in the trailing four quarters.
The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 11.5% from the year-ago figure.
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Nordstrom Confirms Buyout Proposal Valued at $3.8 billion
Nordstrom, Inc. (JWN - Free Report) has been making progress on its customer-based strategy. It is focused on driving Nordstrom banner growth, optimizing operations and building momentum at the Rack banner. In the latest development, its special committee of the board of directors said that it had received a proposal from Erik and Pete Nordstrom, members of the Nordstrom family, along with El Puerto de Liverpool (Liverpool), to buy the entire outstanding shares of the company, except shares held by them. This $3.8-billion buyout offer looks to take the fashion retailer private.
Let’s delve deeper.
Details on Nordstrom’s Buyout Proposal
This buyout proposal offer is equivalent to $23 per share in cash, reflecting a slight premium to Wednesday’s closing stock price. Erik and Peter Nordstrom, the great-grandsons of founder John Nordstrom and present executives of the company, notified that the merger consideration will be funded through rollover equity, cash and $250 million of new bank financing. This leaves the current indebtedness to remain outstanding.
We note that the Nordstrom family has a 33.4% stake in the company. Liverpool, which is a Mexico-based department store chain, owns roughly 10% of Nordstrom’s shares, per the regulatory filing. On a combined basis, the group has a stake of approximately 43% of shares, according to the filing.
Comprising independent and disinterested directors, the special committee was made with respect to the potential buyout proposal. Post the buyout proposal, the special committee, along with the other independent directors, will prudently review the proposal, making consultations with the independent financial and legal advisors to evaluate the course of action in the best interests of the company and its shareholders.
However, the company’s shareholders need not take any action for the time being. Also, there’s no assurance that this proposed offer will be approved or consummated. The company has no intention to reveal any other developments on this matter unless further necessary disclosures are made.
The latest buyout offer comes as no surprise. In 2018 too, the Nordstrom family made a buyout proposal to take the company private.
How is Nordstrom Performing Now?
In late August, Nordstrom posted its second-quarter fiscal 2024 results, wherein both the bottom and top lines beat the Zacks Consensus Estimate and improved year over year. The company posted adjusted earnings of 96 cents a share, which surpassed the consensus estimate of 74 cents and improved from 84 cents in the year-ago period.
Total revenues of $3.9 billion also rose 3.2% year over year. Top-performing categories during the quarter included active, women’s apparel, beauty and kids. Digital sales grew 6.2% year over year, accounting for 37% of the total quarterly sales. The timing shift of the anniversary sale contributed about 100 basis points to the increase in digital sales.
The company’s Rack banner has been doing well for a while. It is on track to increase productivity throughout its network, lower transportation costs, reduce delivery times and enhance services via faster delivery. The company continues focusing on introducing more premium brands at Rack, better assortment and increased brand awareness. It witnessed an improvement in the Nordstrom Rack banner, driven by strategic brand penetration. Sales at the Nordstrom Rack banner advanced 8.8% to $1.3 billion while comparable sales rose 4.1% in the fiscal second quarter.
The Rack banner's digital channel is a differentiator to the off-price retail, allowing customers to shop whenever and however they want. The company has been expanding its merchandise offering of brands at reasonable prices along with a focus on in-stock rates. In the fiscal second quarter, its private brands posted mid-single-digit growth during the anniversary sale, with the Nordstrom brand and Zella being the top volume brands of the event.
The company has made the strategic decision to change how it stores and accesses data. This transformational change will improve data access and analysis capabilities, hence enhancing the ability to leverage generative AI solutions and services at a higher pace. This transformation is likely to be completed by the end of the year.
What’s More for Nordstrom?
It is yet to be seen whether Nordstrom will accept this buyout proposal in the future. For now, JWN stock is performing well on the bourses.
Image Source: Zacks Investment Research
Over the past six months, shares of this Zacks Rank #1 (Strong Buy) company have gained 33.5% against the industry’s 3.3% decline. Nordstrom remains focused on its long-term strategy, which builds on its market strategy to capitalize on its digital-first platform to better serve customers, gain market share and deliver profitable growth. For this, it is focused on winning in the most important markets, expanding the reach of Nordstrom Rack and enhancing its digital velocity. Hence, the retailer will continue performing well ahead based on the aforesaid catalysts.
Other Key Picks
We have highlighted three other top-ranked stocks, namely Boot Barn (BOOT - Free Report) , Abercombie (ANF - Free Report) and Deckers (DECK - Free Report) .
Boot Barn, a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories, currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has a trailing four-quarter earnings surprise of 7.1%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales and earnings per share indicates growth of 10.7% and 8.9%, respectively, from the year-ago figures.
Abercrombie, a leading casual apparel retailer, currently sports a Zacks Rank of 1. ANF delivered an earnings surprise of 28.9% in the last reported quarter.
The Zacks Consensus Estimate for Abercrombie’s current financial-year sales indicates growth of 11.5% from the year-ago figure.
Deckers, a footwear and accessories dealer, currently carries a Zacks Rank #2 (Buy). DECK delivered an average earnings surprise of 47.2% in the trailing four quarters.
The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 11.5% from the year-ago figure.