Nordstrom adds former Nike executive to board as activist battle continues
Nordstrom is being scrutinized by investors for its lack of e-commerce progress.
Shoppers enter a Nordstrom department in Austin, Texas on 03 March 2023.
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Nordstrom announced on Monday that it had appointed former Nike operating chief Eric Sprunk as a member of its board. The company is under pressure from an activist shareholder.
Nordstrom's shares closed at $17.00 on Monday, up about 4%.
Sprunk will join the board of directors immediately. He was Nike's COO between 2013 and 2020. Nordstrom's board will now have 11 directors following the appointment.
Brad Tilden, a Nordstrom board member, highlighted Sprunk’s "track-record of driving ecommerce growth and large scale transformations within a global complex business."
Ryan Cohen, a prominent activist investor, has been scrutinizing the retailer's performance. Cohen, the founder of Chewy, and the chairman of GameStop bought a large stake in Nordstrom, with the intention of shaking up the retailer's Board, according to sources familiar with the situation.
These people claimed that one of the requested changes was to remove Mark Tritton from the Board. He had been Bed Bath & Beyond's former CEO. Cohen had previously purchased and sold a large stake in the home products retailer. The company is now facing bankruptcy.
In a Monday proxy filing, the company stated that it had "received a notice from a share holder stating their intention to nominate 2 candidates for the election to the Board of Directors at the Annual Meeting. This notice was later withdrawn."
Nordstrom refused to confirm whether Cohen was that shareholder or if he influenced Sprunk’s appointment. Cohen's company, RC Ventures did not respond when asked for comment.
The proxy does, however, hint at a possible ongoing dispute between Cohen and the company. The proxy states that Cohen is seeking a bigger stake in the company. Early in March, his company requested that a board rule be waived so he can acquire up to 19,9% of Nordstrom common stock. As of early March, his firm held 4.2% of Nordstrom's common stock.
Nordstrom adopted a board provision called a Rights Plan in September last year. The plan is designed to protect both the company and its shareholders against a hostile takeover. For example, a person, entity or group could gain control by secretly accumulating a large stake.
The board has recommended that shareholders vote in favor of extending this provision to Sept. 19, 2025. The shareholders will vote during the annual meeting of the company, which is scheduled to take place in the next few months.
Nordstrom reported a slowdown in sales and a fall in profits as the retail environment becomes more difficult. Net income for the high-end department stores fell from $200 million or $1.23 per shares in the holiday period to just $119 million or 74 cents. The company's name-brand banner saw a 2.4% drop in sales, while its off-price banner Nordstrom Rack experienced an 8.1% decline.
The company expects its revenue to fall between 4% and 6 % this fiscal year.
Gabrielle Fonrouge, a CNBC reporter, contributed to this article.