Sluggish sales at Nordstrom Inc. underscore why members of the founding family wanted to take the company private in the first place.
With unseasonable temperatures crimping demand for apparel in the first quarter, comparable sales missed analysts’ estimates. The closely watched measure rose 0.6 percent, the department store chain said Thursday after the markets closed. Analysts were expecting an increase of 1 percent, according to Consensus Metrix.
The results sent the shares down as much as 11 percent to $45.51, the biggest intraday decline in a year, on Friday and added to the industry’s mixed bag this earnings season. Macy’s Inc. cited strong consumer demand, but J.C. Penney underwhelmed investors with sales that missed expectations.
Nordstrom has sought to drive sales at its value-focused Rack chain as a way to insulate the merchandise at its full-price stores from discounts, but the results may cause investors to question that approach. The Seattle-based retailer is also trying new strategies, such as an inventory-free store, after the board ended talks in March with the Nordstrom family to take the company private.
Nordstrom posted sales of $3.56 billion in the first quarter, which ended May 5. That topped the $3.45 billion analysts predicted. Profit in the period amounted to 51 cents a share, excluding some items, more than the 44 cents analysts called for.
Last month, Nordstrom opened its first full-line store in Manhattan. The men’s store will be followed by a women’s location across the street in the fall of 2019. The men’s store offers customers the option to pick up goods they bought online 24-hours a day, even when the store is closed.
In March, a special committee of the retailer’s board ended talks with the Nordstrom family when the two sides couldn’t agree on a buyout price. Earlier that month, the board had rejected a proposal that would have valued Nordstrom at about $8.4 billion, or $50 a share. The family had been working since last June to take the 117-year-old retailer private so it could revive the business outside of the public eye.
The group representing the founding family included the retailer’s co-presidents, Blake Nordstrom, Peter Nordstrom and Erik Nordstrom, a trio that operates in place of a traditional chief executive officer. On the other side of the table was Nordstrom’s independent directors, such as JPMorgan Chase & Co. executive Gordon Smith and TaskRabbit Inc. CEO Stacy Brown-Philpot.
Shares of the retailer had gained 7.5 percent this year through Thursday’s close.
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