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Retail Stocks Slump as Nordstrom Buyout Talks Stall
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Shares of Nordstrom (JWN - Free Report) tanked on Monday after a report surfaced that suggested the department store chain’s attempt to finance a private equity buyout could fall through.
Nordstrom sank over 6.50% after the New York Post reported on Sunday that talks to take the retailer private have started to fade. The Seattle-based chain has been in buyout talks with private equity firms for months, in an effort to reach a deal that is estimated to be worth as much as $10 billion.
The Nordstrom family and private equity firms—including KKR (KKR - Free Report) , Apollo (APO - Free Report) , and Leonard Green—have reportedly found it hard to lock in solid interest rates from lenders in order to completely finance the deal. Banks have begun to seek high interest rates, pointing to negative downward trends in the retail industry as a whole.
The New York Post report cited declining foot traffic in malls and Toys ‘R’ Us’ recent bankruptcy filing as massive, potentially detrimental signs that the retail world is in serious long-term trouble.
“The financing has not worked out. I hear that the Nordstrom financing is not done and no one knows if it can be done,” a retail industry expert with knowledge of the situation told the New York Post. “Toys R Us isn’t good for anyone.”
Nordstrom first announced it would consider taking the company private in June. Nordstrom’s initial statement noted that the family was looking into the possibility of acquiring 100% of JWN’s outstanding shares of common stock.
The retail giant has seen its stock price fluctuate since the beginning of the year as it tries to navigate the changing retail waters. The family seemingly wanted to go private in order to make changes and investments that help the company adapt without having to worry about shareholder reactions.
Last month, renewed energy to go private came just two days after the company announced it would debut a new concept store in California. Branded “Nordstrom Local,” the company won’t stock clothes at the new store, opting instead to focus on personal styling and consultations.
Other Department Stores
The news that Nordstrom might not be able to find financing for a buyout based on alarming retail trends has sent shares of fellow U.S. retailers tumbling on Monday as well.
Shares of Nordstrom’s biggest retail peers, including Macy’s (M - Free Report) and Dillard’s (DDS - Free Report) sank 6.28% and 5.80%, respectively. Kohl’s (KSS - Free Report) stock price dipped by nearly 3.50%, while the SPDR S&P Retail ETF (XRT - Free Report) saw its price fall 0.45%. Shares of the Direxion Daily Retail Bull 2x Shares ETF (RETL - Free Report) dropped by over 2.10%.
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Retail Stocks Slump as Nordstrom Buyout Talks Stall
Shares of Nordstrom (JWN - Free Report) tanked on Monday after a report surfaced that suggested the department store chain’s attempt to finance a private equity buyout could fall through.
Nordstrom sank over 6.50% after the New York Post reported on Sunday that talks to take the retailer private have started to fade. The Seattle-based chain has been in buyout talks with private equity firms for months, in an effort to reach a deal that is estimated to be worth as much as $10 billion.
The Nordstrom family and private equity firms—including KKR (KKR - Free Report) , Apollo (APO - Free Report) , and Leonard Green—have reportedly found it hard to lock in solid interest rates from lenders in order to completely finance the deal. Banks have begun to seek high interest rates, pointing to negative downward trends in the retail industry as a whole.
The New York Post report cited declining foot traffic in malls and Toys ‘R’ Us’ recent bankruptcy filing as massive, potentially detrimental signs that the retail world is in serious long-term trouble.
“The financing has not worked out. I hear that the Nordstrom financing is not done and no one knows if it can be done,” a retail industry expert with knowledge of the situation told the New York Post. “Toys R Us isn’t good for anyone.”
Nordstrom first announced it would consider taking the company private in June. Nordstrom’s initial statement noted that the family was looking into the possibility of acquiring 100% of JWN’s outstanding shares of common stock.
The retail giant has seen its stock price fluctuate since the beginning of the year as it tries to navigate the changing retail waters. The family seemingly wanted to go private in order to make changes and investments that help the company adapt without having to worry about shareholder reactions.
Last month, renewed energy to go private came just two days after the company announced it would debut a new concept store in California. Branded “Nordstrom Local,” the company won’t stock clothes at the new store, opting instead to focus on personal styling and consultations.
Other Department Stores
The news that Nordstrom might not be able to find financing for a buyout based on alarming retail trends has sent shares of fellow U.S. retailers tumbling on Monday as well.
Shares of Nordstrom’s biggest retail peers, including Macy’s (M - Free Report) and Dillard’s (DDS - Free Report) sank 6.28% and 5.80%, respectively. Kohl’s (KSS - Free Report) stock price dipped by nearly 3.50%, while the SPDR S&P Retail ETF (XRT - Free Report) saw its price fall 0.45%. Shares of the Direxion Daily Retail Bull 2x Shares ETF (RETL - Free Report) dropped by over 2.10%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>