Edwin Tan
Two major department store chains are exploring private ownership in the backdrop of muted consumer demand and growing competition from discount retailers, in a sign that private equity interest may be making a comeback in the retail space.
Nordstrom’s (NYSE:JWN) founding family is renewing a takeover offer, and the retailer has asked investment banks Morgan Stanley and Centerview Partners to reach out to private equity firms to gauge their interest for a potential deal.
Meanwhile, Macy’s (NYSE:M) has decided to open its books to Arkhouse Management and Brigade Capital to allow due diligence that could lead to them raising their $6.6B bid to take the company private, Reuters reported.
The developments may signal a change in U.S. private equity firms’ interest in the retail sector, as investments had accounted for only 7% of the total $2.6T PE deal volume in the last decade, Dealogic data showed, compared to the previous decade’s 15% of the total volume of $1.7T.
But retailers are still struggling with macro challenges, and have increasingly shuttered stores amid low customer traffic. High inflation has led to budget-conscious consumers cutting back on discretionary spending and shopping at discount retailers such as TJX (TJX) and Burlington Stores (BURL).