The family is considering taking the retailer private but great earnings would have made a deal much more expensive
Nordstrom narrowly missed analysts’ expectations when it reported fourth-quarter earnings on March 1, 2018. For the namesake family, which is considering taking the company private, that may have been the best thing the retailer could have done.
For a retailer that is investing heavily and, it seems, successfully in a fast-changing industry, the risk was that the numbers were good, the shares shot up and the deal became too expensive. The stock is up 11 % in the last 12 months and 6.5 % since the beginning of 2018. Sales for fiscal year 2017 reached a record USD15 billion. With a flagship men’s department store slated to open in Manhattan next month, the bet is that they will only keep climbing.
Thus, a slight drop in the stock may be exactly what co-presidents Blake, Erik, and Peter Nordstrom needed.
Earnings per share for the fourth-quarter came in at USD 1.20, under estimates of USD 1.24. Shares fell 1.6 % in aftermarket trading.
Yet revenue was USD 4.7 billion, beating estimates of USD 4.62 billion, and net sales for the fourth quarter increased 8.4 %—the biggest jump the company has seen in years. With smart e-commerce acquisitions, including the website HauteLook and the subscription service Trunk Club, and experimental new concept stores such as Nordstrom Local in Los Angeles, Nordstrom is giving customers lots of reasons to stick around. Indeed, it is bringing in new ones. The company saw customer growth of 4 %, to 33 million in 2017.
Lenders, who grew jumpy about a deal last fall, should now feel assured: Under threat, Nordstrom is adapting and thriving. If the company wants to go private, the time is now.