What: Nordstrom is reported to be considering spinning-off its loss-making off-price Rack business

Why it is important: It is building on a strategy which has been previously used by other department stores to split between online and offline businesses but applied here to an entire division rather than a sales channel.

Nordstrom CEO Erik Nordstrom mentioned during the Q3 earning call that he was not satisfied at all with the recovery of Nordstrom Rack, which was not aligned with customers’ expectations in terms of number of premium brands and price point level of products sold there.

This is the reason why Alix Partners (who is also advising Saks Fifth Avenue, Hudson Bay and Macy’s on their e-commerce brand spin-off projects) has been appointed to help improve the overall performance and profitability.

According to Bloomberg, Alix Partners would be in fact exploring with Nordstrom the possibility to proceed with a spin-off of their Rack branch and consider what it would entail in terms of management team split and individual public reporting. This approach builds on Alix Partners’ management of similar but not identical business cases.

Nordstrom reported to consider a spin-off of Nordstrom Rack business