The family behind
Members of the founding Nordstrom family are in the early stages of discussing a proposal to boost their roughly one- third stake to over 50%, according to people familiar with the matter. It is not clear how the family would increase its stake — one possibility is through a buyback at a premium, one of the people said — and there is no guarantee it will follow through.
Should they, the family may encounter resistance: 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, one of the people said.
The board has been seeking to bring in an outsider to replace the two great-grandsons of the founder, who have been serving as co-presidents,
Since then, the stock has dropped by more than one-third compared to a roughly 19% increase for the S&P 500 Retailing index. Like other retailers, Nordstrom has a scrapbook to remake itself amid rapidly changing shopper habits. Its shares closed Wednesday at $ 33.11, up nearly 8% after The Wall Street Journal reported on its family plans, giving the Seattle company a market value of just over $ 5 billion.
The oldest brother, Blake Nordstrom, died unexpectedly in January at the age of 58, shortly after revealing he had been diagnosed with cancer. He had shared the title of co-president with his brothers Erik and Pete, who now runs the company jointly.
Of the three, Blake handled more of the traditional chief executive duties such as communicating with Wall Street. Pete oversees merchandising and has helped build Nordstrom's designer business. Erik is in the charge of e-commerce and has been involved in the rapid growth of the retailer's off-price chain, Nordstrom Rack. The brothers have spent their entire careers at Nordstrom.
Nordstrom has had only one nonfamily CEO since its founding by John W. Nordstrom, a Swedish immigrant, in 1901: John Whitacre led the company from 1997 until 2000, when he resigned the following poor results. Blake Nordstrom succeeds him.
Nordstrom's sales dropped 3.5% year over year in the three-month period ended May 4. Revenue fell 5.1% at its roughly 140 full-priced stores and less than 1% at its more than 240 discount outlets. The company also lowered its earnings outlook for the fiscal year in May.
While many department stores are shrinking by closing stores or reducing the size of existing locations, Nordstrom has been expanding. It is spending roughly $ 500 million to gain a toehold in Manhattan, including the planned opening of its first women's store in the city this fall. It has snapped up e-commerce companies such as the flash-sale website HauteLook and the Trunk Club subscription service. It is also opening smaller stores called Nordstrom
Nordstrom is set to report its second-quarter earnings Aug. 21.
—Suzanne Kapner contributed to this article.
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