I hope this doesn't change Nordstrom too much. One of the last department stores worth stopping into. JC Penny and Macys feel so run down (and I'm talking a nice Southern California mall, not one somewhere in the middle of the country). Bloomingdales is nice too, but they don't seem like they'll have the same staying power.
I hope this actually does change Nordstrom because their corporate direction has been terrible over the last few years while trying to maximize shareholder value.
They’ve closed all Canadian operations, despite their Vancouver store being one of their highest earning stores in North America. They’ve closed several west coast stores in the US as well, citing crime but insiders had said it was because they want to move into lower cost areas instead.
Basically they’re trying to move into the market that JC Penny and Macy are leaving open, which has been slowly making Nordstrom itself much lower quality as a shopping experience.
Over the last few years they’ve turned their shopping experience into more of a dumping ground of random clutter
Perhaps going private will let them focus on treating their experience as part of the product.
Sales are down, so they cut costs by cutting staff and presentation. That ultimately turns the store into a warehouse of goods which in turn discourages shopping further. With that decline they often resort into cutting store operating hours which further kills off shopping.
One of my local malls is open from like 11am to 6pm on the weekdays and 8pm on the weekends. Even if I wanted to shop there, it's hard because they are closed during normal work hours. The shops and stores are all manned with a skeleton crew. I've seen Macy's have a single employee manning the entire store.
As a male with absolutely no fashion sense but an occasional need to look presentable, I’ve always appreciated that you can get a free appointment with a personal stylist to help select your wardrobe. The cost is of course baked into the price of the clothing, but it is going to be quality stuff that lasts for a long time and be comfortable.
Saks used to have a men's store in San Francisco where you could just get a guy to dress you. Barney's men's department was good, too. Unfortunately these are long gone. There is an overall lack of places for a man to buy clothes in American cities. I've noticed when I am abroad there seem to be more.
I worked at Nordstrom for 8 years, first in customer service, then in IT, then in engineering. I think this is a good move. The Nordstrom family cared a lot about the brand and the customers, the shareholders didn't. Things were really going downhill when I left. I hope they can get the boat righted.
I happen to have some inside knowledge, this was a concept store created for a specific marketing campaign and no intention of this being rolled out further to their stores. The store/campaign itself was like three waves of executives ago at this point and will likely never be more than this single store. They were experimenting with box in a box but have mostly lost those partnerships too, the Sephora partnership was largely seen as beneficial to Sephora more than JCP.
This sounds really interesting - they've decided to make their new stores a place to visit not just to shop but as a place to learn (clearly leading to more shopping).
Stores used to rely on other mall properties to do the 2nd part but as the concept of the Mall starts fading, they need to start doing this themselves.
Wow, it's like an Apple store but it opened six years after JCP fired the CEO they headhunted from Apple retail. And the CEO mentioned in the article has already been replaced.
> and I'm talking a nice Southern California mall, not one somewhere in the middle of the country
This isn't the bound you seem to think it is. SoCal is quite wealthy, but the workers aren't exactly motivated or caring. I remember going keyboard shopping at Fry's well before any talk of bankruptcy and the whole aisle was basically a pile of scattered keycaps and nearly-empty keyboards. And I was just in a Macy's the other day (not in SoCal), and actually remarked how nice the store was set up compared to the overall trend of everywhere else going down hill. So as usual, YMMV.
Dillards isn't bad, and at least seems to have a better selection than Macy's. They are a bit pushy in terms of sales though, and they don't seem to do a good job at customizing their selection regionally (the amount of winter coats and thick sweaters I've seen at Dillard's is absolutely comical for Houston locations)
Respectfully disagree. I feel like quality and selection at most Nordstroms I’ve been to recently has been much worse. Salespeople have been less knowledgeable and more pushy. Feels like they’ve moved from upmarket into a space more easily replaced by lower cost online competitors.
I used to grab coffee in Toronto's Nordstrom cafe. The store was positioned so that you had to cross it after getting out of the subway on your way to other stores and offices—as prime of a location as it gets. It still got tanked by the rent
My local Macy's is pretty nice, so I shop there pretty regularly. It's in the middle of the country, but it's also located in a relatively affluent area and attached to a mall that's still doing quite well.
> Nordstrom Inc. is going private in an all-cash transaction valued at about $6.25 billion in a bet by the founding family that the department-store company will be more successful without the scrutiny and demands of the public market.
> As part of the transaction, the family will acquire all of the outstanding common shares of Nordstrom not already beneficially owned by the Nordstrom Family and Mexican department store chain El Puerto de Liverpool SAB.
> Under the terms of the agreement, Nordstrom common shareholders will receive $24.25 in cash for each share of Nordstrom common stock they hold. The Nordstrom Family will have a majority ownership stake in the company.
You should probably know these things before choosing to invest in the stock market.
The TL;DR of it is that your shares will be sold for you, and money will be deposited into your account. As a "common" shareholder, you don't get a choice in the matter (I mean, you can "vote", but common share votes aren't worth the email they're printed on).
Interesting. I have seen large scale department stores like Nordstrom die one after another. Nordstrom Canada actually failed a few years ago. I am not sure if I was rich and owned Nordstrom in some way, I would invest my own money into Nordstrom. Instead I would do everything I can to diversify.
I don't think department stores are failing because they're a bad business. I think they're failing because they're being gutted by corporate raiders for their real estate assets.
I have come to absolutely detest online shopping. I have to return so much stuff, live with so many things that I don't actually love, generate sooooo much trash, and spend hours on hours researching everything because I can't hold it in my hand.
Then I walk into REI and ask them if I can try on a size 9 wide of a running shoe. They tell me they don't have it, so I ask them if they have any wide... they don't have a single wide shoe. Then I ask what they have and they say "Ohh we have 200 of the exact same shoe in the exact same size in stock"
And then I go order 5 different 9-wide shoes on amazon and return 4....
Also, the way that Macy’s leadership talks about the business and the merger’s they’ve pursued, they consider the business to be a “toll bridge”, where they are the only large scale department store in America and thus if you want certain premium fashion goods to have distribution throughout the United States, you have to sell to them in a way that they can generate a profit.
They don’t seem to care about the customer at all and there stores are very rundown and not well maintained. It doesn’t feel like a luxury. They seem focused on selling premium fashion brands on their distribution network with location numbers. They don’t care about anything else.
And that's the reason they're being gutted. They're not crazy growth businesses anymore but have enough cash flow and real estate to make it profitable to be bled to death by these vultures.
If they cannot generate enough profits to even justify holding on to the real estate rather than putting the real estate to some other use, is that meaningfully different from failing?
Yep. The department store model still makes sense in Nordstrom's target price bracket. The whole point of a physical store in the 21st century is that it can provide a hands-on, in-person experience that an online store can't. Nordstrom sells premium products where that kind of experience is worthwhile.
I don't need a physical store to compare two different 6-foot USB cables. I do need a physical store for a suit, or a nice pair of shoes, or cologne.
Corporate raiders only targeted "distressed assets". They didn't pay full-price for healthy brands to gut - the whole point was to flip cheap (failing) stores.
> I don't think department stores are failing because they're a bad business. I think they're failing because they're being gutted by corporate raiders for their real estate assets.
I think you are confusing cause and effect at least the case I know of, Sears. Because Sears' core business was dying, because of Amazon, the best way to get value out of it was to raid its real-estate assets. It may have hastened Sears' demise, but it probably was the smartest thing to do from a business standpoint.
Nordstrom has been pretty steady as-is though. It's still one of the few brick and mortar stores I actually go to.
Also, their online shopping is pretty solid as well. I always use them for gifts. I think they buffed it up during the pandemic and its paid dividends.
The only time I will set foot in a mall is to go get a new suit/jacket or something at Nordstrom. It's at the nice halfway point between the slop and Neimans and they can turn it around same day for $25.
Of the 13 stores they opened in canada, 7 were the "nordstrom rack" discount brand, which is really not nordstrom. IIRC they were actually some of the old stores from the failed Target expansion, and they felt like failed Target stores. It's not a surprise that they failed.
If they can go back to their roots with digital, maybe. They would need to figure out how to do a "ssense + crate and barrel + sephora" under one online banner property. As far as I can think, nobody has really nailed the high end department store online have they?
Source: I worked at Blizzard and held Blizzard stock during the Activision merger, and then held ATVI stock during the Microsoft acquisition. Also a close friend of mine worked at Spunk during the Cisco acquisition.
One of two things happen: a stock-for-stock exchange at a ratio (like 2 Blizzard becomes 1 ATVI stock), or a complete buyout and liquidation of the acquired company's stock.
In the latter, you are basically sent a check based on the sale price agreed upon by the two companies. In the case of Nordstrom, shareholders receive $24.25 for each unit of stock they hold. The downside is you pay capital gains on it. In the case of my friend at Splunk, she is left with a horrifying tax bill that'll be in the upper-5 to lower-6 figures.
What also happens is once the share price is agreed upon, the stock is priced in. As a result there is little point in shorting as the stock's price moves very little.
Readit News
They’ve closed all Canadian operations, despite their Vancouver store being one of their highest earning stores in North America. They’ve closed several west coast stores in the US as well, citing crime but insiders had said it was because they want to move into lower cost areas instead.
Basically they’re trying to move into the market that JC Penny and Macy are leaving open, which has been slowly making Nordstrom itself much lower quality as a shopping experience.
Over the last few years they’ve turned their shopping experience into more of a dumping ground of random clutter
Perhaps going private will let them focus on treating their experience as part of the product.
Sales are down, so they cut costs by cutting staff and presentation. That ultimately turns the store into a warehouse of goods which in turn discourages shopping further. With that decline they often resort into cutting store operating hours which further kills off shopping.
One of my local malls is open from like 11am to 6pm on the weekdays and 8pm on the weekends. Even if I wanted to shop there, it's hard because they are closed during normal work hours. The shops and stores are all manned with a skeleton crew. I've seen Macy's have a single employee manning the entire store.
Deleted Comment
Hard to imagine such a customer friendly company drastically changing when the founders retake control.
They're supposedly rolling them out nationwide - JCP does gamify shopping in a way that almost makes it fun.
https://fortworth.culturemap.com/news/fashion/11-01-19-j-c-p...
https://www.jcpenney.com/m/hurst-store-page
Stores used to rely on other mall properties to do the 2nd part but as the concept of the Mall starts fading, they need to start doing this themselves.
I bought the suit that I wore to my wedding form Nordstrom. The sales associate that helped me out did a fantastic job.
This isn't the bound you seem to think it is. SoCal is quite wealthy, but the workers aren't exactly motivated or caring. I remember going keyboard shopping at Fry's well before any talk of bankruptcy and the whole aisle was basically a pile of scattered keycaps and nearly-empty keyboards. And I was just in a Macy's the other day (not in SoCal), and actually remarked how nice the store was set up compared to the overall trend of everywhere else going down hill. So as usual, YMMV.
You do realize that all the best maintained malls are in the middle of the country right? :)
Mall of America is about as middle as it gets.
> As part of the transaction, the family will acquire all of the outstanding common shares of Nordstrom not already beneficially owned by the Nordstrom Family and Mexican department store chain El Puerto de Liverpool SAB.
> Under the terms of the agreement, Nordstrom common shareholders will receive $24.25 in cash for each share of Nordstrom common stock they hold. The Nordstrom Family will have a majority ownership stake in the company.
- https://archive.is/soEKw
If you don’t want to sell your shares, prepare to convince a majority of the shareholders otherwise.
This will be very hard since 45% of the company is owned by the people making the buyout offer.
The TL;DR of it is that your shares will be sold for you, and money will be deposited into your account. As a "common" shareholder, you don't get a choice in the matter (I mean, you can "vote", but common share votes aren't worth the email they're printed on).
I have come to absolutely detest online shopping. I have to return so much stuff, live with so many things that I don't actually love, generate sooooo much trash, and spend hours on hours researching everything because I can't hold it in my hand.
Then I walk into REI and ask them if I can try on a size 9 wide of a running shoe. They tell me they don't have it, so I ask them if they have any wide... they don't have a single wide shoe. Then I ask what they have and they say "Ohh we have 200 of the exact same shoe in the exact same size in stock"
And then I go order 5 different 9-wide shoes on amazon and return 4....
They don’t seem to care about the customer at all and there stores are very rundown and not well maintained. It doesn’t feel like a luxury. They seem focused on selling premium fashion brands on their distribution network with location numbers. They don’t care about anything else.
I don't need a physical store to compare two different 6-foot USB cables. I do need a physical store for a suit, or a nice pair of shoes, or cologne.
I think you are confusing cause and effect at least the case I know of, Sears. Because Sears' core business was dying, because of Amazon, the best way to get value out of it was to raid its real-estate assets. It may have hastened Sears' demise, but it probably was the smartest thing to do from a business standpoint.
Also, their online shopping is pretty solid as well. I always use them for gifts. I think they buffed it up during the pandemic and its paid dividends.
Of the 13 stores they opened in canada, 7 were the "nordstrom rack" discount brand, which is really not nordstrom. IIRC they were actually some of the old stores from the failed Target expansion, and they felt like failed Target stores. It's not a surprise that they failed.
Though it's not like these all served different geographic markets - e.g. My local Nordstrom Rack was a 10 minute drive from my local Nordstrom.
FWIW my local Nordstrom Rack was an old Future Shop location. Now it's a Marshalls.
E.g. How do existing shareholders get paid out? What happens to shorts? Treasury shares? Options? RSUs?
It seems like it would be extremely complex.
One of two things happen: a stock-for-stock exchange at a ratio (like 2 Blizzard becomes 1 ATVI stock), or a complete buyout and liquidation of the acquired company's stock.
In the latter, you are basically sent a check based on the sale price agreed upon by the two companies. In the case of Nordstrom, shareholders receive $24.25 for each unit of stock they hold. The downside is you pay capital gains on it. In the case of my friend at Splunk, she is left with a horrifying tax bill that'll be in the upper-5 to lower-6 figures.
What also happens is once the share price is agreed upon, the stock is priced in. As a result there is little point in shorting as the stock's price moves very little.
Isn't that because she was written a check well into the 6-figures?
Will be interesting to see how they do privately, good luck to them!