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Home›External market›Nordstrom Hires AlixPartners to Investigate Potential Impact of Rack, Report Says

Nordstrom Hires AlixPartners to Investigate Potential Impact of Rack, Report Says

By Pia
December 20, 2021
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Nordstrom Rack in downtown Seattle

Getty Images

Nordstrom tapped consultancy group AlixPartners to help it examine a possible fallout from its low-cost Nordstrom Rack business, according to a Bloomberg report.

Representatives for Nordstrom and AlixPartners did not immediately respond to CNBC’s requests for comment.

Potential review at Nordstrom comes amid bigger upheaval in the department store industry as companies like Macy’s and Kohl’s come under pressure from activists to build faster growing online businesses out of retail stores more traditional. These investors encourage such decisions in order to recoup the higher valuations often attributed to e-commerce retailers.

Macy’s is working with AlixPartners to review its e-commerce operations, after activist group Jana Partners urged the company to separate its digital arm from its physical stores. Kohl’s has also been pressured by activist Engine Capital to consider the same move.

This was after Saks Fifth Avenue separated its e-commerce operations from its retail stores earlier this year, and executives have since touted it as a successful strategy. Saks.com is now reportedly preparing for an initial public offering in 2022.

Nordstrom, meanwhile, is struggling to increase sales to pre-pandemic levels in a bid to compete with some of its peers. In the three-month period ended October 30, Nordstrom Rack’s sales are down 8% from 2019, while revenue at its eponymous department store is up 3% over two years.

Chief Executive Officer Erik Nordstrom told analysts on a conference call in November that the company had hired outside consultants to look for ways to improve Rack’s performance and profitability. “We are not at all happy with our Rack business as it is clear that our recovery is lagging behind what we think it should be,” he said at the time.

Nordstrom shares closed less than 1% lower on Monday at $ 20.10, after falling around 36% year-to-date. This brings the company’s market capitalization to around $ 3.2 billion.

Read Bloomberg’s full report here.


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