What’s the Buzz around Nordstrom Stock?
Movement in stock
Nordstrom (JWN) stock was up 1.4% in the week ended September 15. The company’s stock rose 6.0% on September 13 in reaction to the news on September 12 that Nordstrom was nearing a partnership with private equity firm Leonard Green to assist in Nordstrom’s bid to go private.
On September 14, Nordstrom stock fell 2.1% along with other retail stocks in reaction to the news of rising inflation in August. According to the Labor Department, the US Consumer Price Index rose 0.4% in August due to the rise in the cost of gasoline and rent.
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Nordstrom first announced its intention to go private in June 2017. The company at that time disclosed that the members of the Nordstrom family (Nordstrom’s co-presidents Blake Nordstrom, Peter Nordstrom, and Erik Nordstrom, president of stores James Nordstrom, chair emeritus Bruce Nordstrom and Anne Gittinger) were exploring the possibility of going private.
The company’s decision comes against the backdrop of a challenging retail market where online retailers like Amazon (AMZN) and off-price retailers like TJX Companies (TJX) are eating away at the market share of major department stores.
As of September 15, Nordstrom’s stock has fallen 2.5% on a YTD (year-to-date) basis. The stock prices of peers Macy’s (M), JCPenney (JCP), and Kohl’s (KSS) have fallen 36.9%, 49.3%, and 8.6%, respectively, on a YTD basis.
On a YTD basis, Nordstrom and the other department store stocks have underperformed the S&P 500 Index, which has risen 11.7% since the start of 2017.
Department stores are taking several initiatives to revive their sales growth. On September 11, Nordstrom announced its new retail concept called Nordstrom Local, which will not stock any inventory but will provide services like tailoring and alterations, access to personal stylists, buy-online, a pick-up-in-store facility, curbside pick-up, and many other services. The first Nordstrom Local will be launched in West Hollywood on October 3.
Nordstrom is taking several other measures to improve its top line, which we’ll discuss in the next part of this series.