Cohen At It Again, As Meme King Sends Nordstrom Stock Surging
Did the famously close-knit Nordstrom
While they are yet to share their opinion, the answer is likely a resounding no.
Because the man who helped catapult Gamestop stock into the stratosphere and most recently dabbled in Bed Bath & Beyond
Nordstrom shares surged Friday to close more than 24% higher at close of play, before a pull back Monday after news that Cohen had upped his holding in the retailer.
Even so, the stock price is nearly 50% up on the start of the year and at levels not seen since the summer.
Nordstrom shares have dropped roughly 55% over the past five years, and ratings agency Fitch again downgraded the company last month, saying its “operating trajectory has been weaker than most retailers.”
The question now is whether Cohen is a boardroom reformer championing the cause of the little investor or a game playing opportunist about to ‘pump and dump’, leaving Nordstrom and those less fleet-of-foot to pick up the pieces.
Cohen Plans Board Shake Up
The activist investor is understood to be keen to use his new position to shake the high-end department store group’s board up with a view to supporting cost cuts amid a decline in Nordstrom’s market cap.
Nordstrom, for its part, said it was open to hearing what Cohen has to say.
The company said in a statement: “While Mr. Cohen hasn’t sought any discussions with us in several years, we are open to hearing his views, as we do with all Nordstrom shareholders. We will continue to take actions that we believe are in the best interests of the company and our shareholders.”
Cohen had previously traveled to Nordstrom’s Seattle base to meet with members of the Nordstrom family and learn more about the business, founded by the Nordstrom family, and an inner circle, who still own roughly 30% of the stock. Brothers Erik and Peter serve as CEO and president, respectively, and also have board seats.
On Jan. 19 Nordstrom slashed its annual profit forecast after heavy discounting failed to entice shoppers at its off-price Rack stores, leading to weak holiday sales.
The company said it now expected annual revenue growth to be at the lower end of previous expectation of 5% to 7%. Net sales at Nordstrom Rack fell 7.6% in the nine weeks to Dec. 31, compared with the nine weeks ended Jan 1, 2022.
Nordstrom now expects adjusted earnings per share of $1.50 to $1.70 for fiscal 2022, compared with its prior outlook of $2.30 to $2.60. The company is due to report earnings March 2.
Chewy Boss Underdog Champion
Cohen, who founded pet retail and health disruptor Chewy, has become something of an, ahem, underdog champion with the meme stock crowd. He is chair of Gamestop, which infamously saw its stock explode two years ago, and far more recently triggered a short-lived rally at Bed Bath & Beyond (BB&Y), before unceremoniously dumping the stock.
The homewares and furniture retailer has since defaulted on debts and is staggering towards what seems an inevitable Chapter 11 filing.
Linking his past and present activism is former Target
Joining BB&B in 2019, Tritton spearheaded what was supposed to be a three-year-turnaround but instead he left accused of overseeing an unrealistic and over-ambitious project that failed to address the retailer’s fall from grace.
Tritton has been on Nordstrom’s board for nearly three years, having previously worked for the company from 2009 to 2016, but Cohen is believed to favour ousting Tritton from the board and as chair of Nordstrom’s compensation committee overseeing salaries for Nordstrom family members because he previously worked under them.
Cohen has previously called Tritton out for the compensation package he received while at BB&B in a letter last year.
“Mr. Tritton should recognize that chief executives who are awarded outsized compensation and seek frequent publicity also invite much higher expectations when it comes to growth and shareholder value creation,” the letter stated.
One thing is for sure, it’s never dull when Cohen is around.