On June 8, 2017, Nordstrom, an American luxury department store chain, announced it was exploring “going private” after nearly 50 years as a publicly traded company. As a result, its shares surged more than 20% that day.
By March 2018, however, Nordstrom said it had ultimately decided against taking its business private after the company’s advising board and its original founders, the Nordstrom family, could not reach an agreement on the deal.
The company remains public, but its shares haven’t seen overly impressive growth. If you invested $1,000 in Nordstrom stock 10 years ago, that investment would be worth around $1,030 as of March 6, 2020, for a total return of 3%, according to CNBC calculations. In the same time frame, by comparison, the S&P 500 earned a total return of around 226%. Nordstrom’s current share price is around $30.
It’s important to note that the stock market is in a period of increased volatility amid the coronavirus outbreak, and retailers have been particularly hard hit.
CNBC: Nordstrom’s stock as of March 2020.
While an investment in Nordstrom would have earned you a profit, it’s worth mentioning that you would have been better off buying a low-cost index fund that tracks the market — one of Warren Buffett’s favorite investments — since the shares underperformed the return of the S&P 500.
And although the company’s stock performance over the last decade couldn’t match that of the S&P 500′s, any individual stock can over- or underperform and past returns do not predict future results.
How Nordstrom plans to draw in new shoppers
To up its performance in 2020, Nordstrom is focusing on how it can further entice customers to shop both in stores and online.
Although shoppers take notice of the Seattle-based retailer for carrying trendy brands, including Topshop and Sugarfina, the department store — like many of its rivals — has struggled to keep up in an age where many prefer the convenience of online shopping on sites such as Amazon. Others are choosing to buy directly from the brands they love, bypassing middlemen such as department stores.
One strategy the brand is trying is opening up concept stores in both Los Angeles and New York that offer services, such as alterations and online order pickup, rather than inventory. To draw in new shopper demographics, the retailer has also been teaming up with trendy digital brands, such as Allbirds, a direct-to-consumer sneaker company, and Glossier, a digital-first beauty business, to sell their fan-favorite products in Nordstrom stores.
What’s new with Nordstrom?
Earlier this month, it was announced that Nordstrom would be changing up its leadership structure. Pete Nordstrom, who formerly served as co-president alongside Erik Nordstrom, will become the sole president of Nordstrom Inc. and act as the company’s chief brand officer. Erik Nordstrom will serve as the sole CEO going forward.
As their last names show, Erik and Pete are descendants of the brand’s founder, John W. Nordstrom, a Swedish immigrant, who opened the first-ever Nordstrom store in Seattle, Washington, in 1901.
Nordstrom also reported its fourth-quarter performance in March. Both its earnings and sales did not meet analyst expectations. Its income came to $193 million, or $1.23 per share for the quarter, but during the same time period in 2019, that number was much higher, at $248 million, or $1.48 a share.
As a result of this news, its stock fell more than 10% that same day.
Looking forward, Nordstrom is hopeful that its recent leadership change will bring about growth in the company. For its fiscal 2020, the retailer said it’s aiming for net sales to climb between 1.5% and 2.5%. However, analysts are less optimistic and predict earnings per share will fall between $3.25 to $3.50 during the same period.
If you are considering getting into investing, start by sticking to the basics. “Develop an overall plan, keep expenses low, diversify, rebalance,” David Wilson, a certified financial planner at Watts Capital in New York, told CNBC.
If going it alone feels too intimidating at first, Wilson suggests starting to invest with the help of a robo-advisor, which is a digital platform that provides automated, algorithm-driven financial advice at a low cost.
Here’s a snapshot of how the markets look now.
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