Members of the Nordstrom family want to boost their stake in the department store chain.
Sources told The Wall Street Journal that the family is in early talks to increase their stake to over 50 percent. One person familiar with the matter said that it might be achieved through a share buyback at a premium.
But not everyone is in support of the plan, with some independent directors unhappy that the family will be using the company's stock drop to their advantage. In addition, the board has been actively trying to find an outsider to replace the two great-grandsons of the founder, who have been serving as co-presidents.
This move follows the family's attempt in 2017 to take the company private, offering about $8 billion, or $50 a share. The board ultimately rejected the offer.
While the stock has dropped by more than one-third since then, its shares closed on Wednesday (July 31) at $33.11, up nearly 8 percent after new of the family’s recent plan. The company is expected to report its second quarter earnings next month.
In May it reported first-quarter earnings that were below analysts’ expectations. The retailer reported revenues of $3.4 billion and earnings per share of 23 cents compared to analyst’s expectations of $3.6 billion and 43 cents.
Nordstrom Co-President Erik Nordstrom said in the company’s earnings conference call at the time, “We’re making the changes we believe are necessary to drive our top line” and he reiterated that “our strength is our commitment to the customer.”
The company has a focus on a local market strategy that enables greater customer engagement via services as well as greater access to merchandise selection with faster delivery and a lower cost to the company. Last year, it launched three Nordstrom Local service hubs in Los Angles, while it's poised to open its NYC flagship on October 24 along with two Nordstrom Local hubs in autumn.