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LBO Fever

08 June 2017 by lberuti

JWN (Nordstrom, Inc) is an upscale fashion specialty retailer based in the US. Founded in 1901 as a shoe store in Seattle, it now operates 354 stores in 40 states and also serves customers online. Like all its peers, it has been rocked by sluggish foot traffic in its department stores and the fierce competition from online retailers. But if its first quarter earnings missed analysts’ estimates, JWN is in better shape than many of its rivals. That is probably the reason why members of the founding family embarked on a plan to potentially take the company private. Such a move could help JWN cope with the retail downturn outside of the spotlight, but it would also most certainly mean more – and maybe much more – leverage at the company than is currently the case. No official deal has been made, but, as a precautionary measure, investors send the company 5-year risk premium 84bps wider at 260bps.