In its 117-year history, Nordstrom Inc. never had two bigger and riskier projects on its plate at the same time — the Manhattan flagship and exploring taking the company private.
Regarding construction and the vendor mix, progress is being made on Nordstrom’s 367,000-square-foot Manhattan flagship, which at north of $500 million represents the retailer’s most complicated and costliest construction project. Whether there’s also been progress on coming up with a plan to go private is unclear. In June, the Nordstrom family, which owns 31.2 percent of the business, said it formed a group to explore the possibility of pursuing a “going private transaction” involving the acquisition by the group of 100 percent of the outstanding shares of common stock of the retailer. The group has not yet made a proposal to the company regarding any such transaction.
For Nordstrom, considered the nation’s strongest-performing department store company, there are several reasons to go private. The firm’s stock price has been dragged down by the rest of the sector, and being beholden to Wall Street’s demands for quarterly profit and sales gains and cost savings impedes investments for long-term growth and for devising strategies to compete against Internet players like Amazon and attract a greater number of Millennials. Nordstrom is moving to make its department stores more contemporary in tone and merchandise and creating flexibility on the selling floors. The Seattle-based retailer remains ahead of the game in off-price and in providing service.
Still, a deal to go private would put much debt on the books and bankers may be wary. So might private equity players which typically want to control the companies they invest in and eventually sell them.
Meanwhile, construction continues on the Nordstrom flagship in Manhattan, located on West 57th Street between Seventh Avenue and Broadway. It will be the retailer’s first full-line department store in the city, consisting of a 320,000-square-foot women’s store, expected to open fall 2019, and a separate 47,000-square-foot men’s store, now scheduled for a spring 2018 opening. The men’s store opens ahead of the women’s store because the retailer is retrofitting an existing space, while the women’s store is being built from the ground up.