Nordstrom to spinoff discount store Nordstrom Rack, report says

 

 

Nordstrom is considering a shift in its business operations. Nordstrom Rack, which is its off-price retailer, might become a standalone company, according to sources familiar with the matter. The people who spoke to Bloomberg asked not be identified as they said that the matter was private.

The sources said that the retailer was looking to spinoff Nordstrom Rack. The firm was considering whether it would lead to two management teams as well as individual public reporting. The Seattle-based retailer has hired AlixPartners to help with the spinoff. Earlier, Macy’s had also also hired the same firm to evaluate its online operations at the request of shareholder Jana Partners.

When asked for a response by several news outlets, representatives from both Nordstrom and AlixPartners declined to comment.

 



During a Q-3 earnings call last month, CEO Eric Nordstrom said that the retailer was “not satisfied at all” with Nordstrom Rack’s recovery. Less than required premium brands were available for customers while lower priced products that were not in demand by the customers were available in excess.

During the call, the CEO also said that the quarter ending October 30 reported that net sales for the retailer were $1.19 billion. Although this was 31 percent higher when compared with the same quarter last year, it was eight percent down from 2019. He added that the company was buying more items. It was also holding a portion that would be used when there would be higher demand or tighter supply.

The CEO also said that the top 50 brands in Nordstrom Rack’s inventory contributed to up to 42 percent of sales, year-to date. In 2019, these brands had contributed to approximately 50 percent of the sales.

While Nordstrom Rack has seen a fall in sales in the third quarter, its rivals such as TJ Maxx and Ross have seen an increase in sales from the same quarter in 2019 as pandemic restrictions in stores were lifted. The number of shoppers increased as they preferred to check the discounts and deals in person that is not available online.


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