One of the leading fashion specialty retailers in the United States, Nordstrom Inc. (JWN), in its streak to optimize shareholders’ return, has entered into an agreement to acquire the online private sale leader HauteLook Inc.
Nordstrom will pay up to $270.0 million in stock to conclude the deal, of which $180.0 million will be an upfront stock transfer and $90.0 million will be a three-year-earn-out based on the company’s performance.
As per the agreement, HauteLook will operate independently as a wholly-owned subsidiary of Nordstrom and will be managed by its current leadership. The agreement provides significant incentive and retention mechanism for senior management.
The deal is expected to close in the first quarter of 2011. Nordstrom and HauteLook engaged Guggenheim Securities and JP Morgan Securities as an exclusive financial advisor for guiding the deal.
With this acquisition, Nordstrom has succeeded in building multi-channel retailing. The acquisition will facilitate the company to increase its direct business capabilities, implement enterprise-wide inventory management system, sell directly to online customers and enhance the company’s customer service.
Nordstrom is a leading fashion specialty retailer in the U.S., offering high quality apparel, shoes, cosmetics and accessories for men, women and kids. The company offers both branded and private label merchandise, which are positioned in the upscale segment of the industry and targeted toward the aspiring middle class. Moreover, the company also offers a private label card, two Nordstrom VISA credit cards and debit cards for Nordstrom purchases. At present, the Seattle-based company operates a network of 115 full-line stores, 78 Nordstrom Racks, two Jeffrey boutiques and one clearance store.
Headquartered in Los Angeles, HauteLook is a leader in the online private sale channel, offering limited time sale event on world’s top fashion and lifestyle brands. HauteLook offers discount of 50% to 75% to its members on top brands for women, men, kids, home, beauty, travel and local services. Membership is free of cost and currently the company has more than 4 million members.
Nordstrom, which competes with Gap Inc. (GPS)and Abercrombie & Fitch Co. (ANF), currently, holds a Zacks #3 Rank, implying a short-term “Hold” rating on the stock. Besides, the company retains a long-term “Neutral” recommendation on the stock.
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