Nordstrom To Go Private in Potential Deal with Leonard Green

Nordstrom's Online Slump

Nordstrom family members are closing in on an agreement with a private equity firm to assist in a buyout of the luxury retail giant. The Street reported that after news broke of the potential deal with Leonard Green & Partners, Nordstrom shares surged over 8 percent in after-hours trading on Tuesday.

It was reported in June that the Nordstrom family, which collectively owns 31 percent of the Seattle-based luxury retailer’s shares, had formed a group to explore a potential “going-private transaction” that would involve the acquisition of 100 percent of Nordstrom’s outstanding shares.

The company has struggled with poor traffic trends, due in large part to eCommerce competitors like Amazon. In 1999, the department store had total sales of $230 billion. Last year, that was down to $155.5 billion.

Just this past week, Nordstrom announced its plans to launch inventory-free stores that would focus more on services than goods, with offerings like tailoring, manicures and even a place to get a drink.

The new design, Nordstrom Local, is set to open in early October in West Hollywood. The location is less than 25 percent of the size of a regular Nordstrom, and although there will be clothes and accessories to try on, the location won’t stock them. Instead, after a customer decides on a look, Nordstrom can either send a personal shopper to retrieve the items from nearby locations in L.A. or arrange to have them shipped directly to the customer’s home.

The potential agreement with Leonard Green would give the Nordstrom family members about $1 billion in equity to help fund the transition. The Nordstrom buyout deal is not finalized yet, and there is still the possibility that other parties will emerge to begin their own discussions. Nordstrom has previously held discussions with both KKR and Apollo.