Nordstrom Inc. (JWN), one of the leading fashion specialty retailers in the United States, in its effort to optimize shareholders’ return, has completed the acquisition of Los Angeles based online private sale leader HauteLook Inc. after making an upfront stock transfer of $180.0 million.
Earlier, the company had announced the acquisition of HauteLook on February 17, 2011. As per the agreement, after making the above mentioned upfront stock transfer, Nordstrom will make another stock transfer of $90.0 million based on a three-year-earn-out subject to the company’s performance, taking the total deal value to $270.0 million.
As per the deal, 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.
With this acquisition, Nordstrom has succeeded in building its multi-channel retailing platform. The acquisition will enable 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 at the aspiring middle class. At present, the Seattle-based company operates a network of 115 full-line stores, 86 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 sales events on the world’s top fashion and lifestyle brands. HauteLook offers discounts of 50% to 75% on top brands for women, men, kids, home, beauty, travel and local services to its members. Membership is free 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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