Nordstrom Swallows ‘Poison Pill’ Following Mexican Retailer’s Stock Purchase

The Nordstrom Board of Directors has adopted a one-year shareholder rights plan, a.k.a. a poison pill, following the purchase earlier this month of 9.9% of the retailer’s stock by Mexican luxury department store Liverpool. The Liverpool stock purchase, valued at $293.8 million, makes the Mexican retailer one of Nordstrom’s largest stakeholders, according to Reuters.

While the Nordstrom press release pointedly doesn’t mention any specific stock purchaser by name, the move sets a 10% limit on purchases of “outstanding shares of Nordstrom common stock in a transaction not approved by the Nordstrom Board.” If this occurs, stockholders that are not part of an acquiring company as of Sept. 30, 2022 will have the right to purchase shares of Nordstrom common stock at a 50% discount to the then-current market price. If Nordstrom is acquired in an unapproved merger, these shareholders would gain the right to buy stock in the purchaser’s company at a 50% discount. The Nordstrom plan expires on Sept. 19, 2023.

Nordstrom had reported a 12% sales increase for the quarter ended July 30, 2022 as customers updated their wardrobes and returned to events, but the retailer also revised its financial outlook in the face of rising inflation: revenue growth for fiscal 2022 is now projected at 5% to 7%, down from 6% to 8%.