Nordstrom extends menswear offerings with Trunk Club acquisition
Trunk Club acquisition
In August 2014, Nordstrom (JWN) acquired Trunk Club, a personalized online clothing service provider for men. Founded in 2009 by Brian Spaly, Trunk Club has more than 500 employees, including 250 stylists. Trunk Club also has showrooms in Chicago, Dallas, Washington, Las Vegas, and Manhattan. The service provider expects revenues to reach the $100-million mark this year.
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Rationale behind the acquisition
Through this acquisition, Nordstrom targets consumers who prefer stylized clothing, but who don’t like to or are too busy to shop in a store. Consumers can email their preferences and size to a Trunk Club stylist, who will send a trunk of selected clothing from which the consumer can make a choice. Customers can purchase what they like and return the rest for free.
Trunk Club is likely to continue operating independently after this acquisition. The service could leverage Nordstrom’s merchandise and resources.
Terms of the deal
Nordstrom purchased Trunk Club in an all-stock transaction of $357 million. Under the acquisition agreement, Nordstrom agreed to pay $100 million in the form of a long-term management incentive contingent upon Trunk Club’s performance. The Trunk Club acquisition could reduce Nordstrom’s fiscal 2014 diluted earnings per share by 3%.
The acquisition further strengthens Nordstrom’s online business. The online channel has been a major growth driver for department stores like Macy’s (M), Dillard’s (DDS), and Kohl’s (KSS). The SPDR S&P Retail ETF (XRT) had 6.33% holdings in department stores as of February 11, 2015.