What happened
Shares of Nordstrom (JWN -0.69%), the department store chain, were rocketing higher on reports that activist investor Ryan Cohen had taken a stake in the company. Cohen is the co-founder of Chewy and may be best known for helping to send GameStop stock skyrocketing in 2021 as he took a stake in the company and pushed for a board shake-up and other changes.
Nordstrom's stock was up 21.5% as of 1:51 p.m. ET on the news.
So what
According to The Wall Street Journal, which first reported the news, Cohen has amassed a stake in the company that makes him one of the five biggest shareholders outside the Nordstrom family. Much like he did at GameStop, Cohen plans to urge the struggling department store chain to make changes to its board.
He believes the best strategy for the company is to cut costs as sales decline and it faces secular headwinds. He also aims to replace Mark Tritton, the former CEO of Bed Bath & Beyond, on the board.
Cohen has not yet held talks with Nordstrom management.
His track record as an activist investor is mixed, as GameStop shares came back to Earth after skyrocketing in a meme-driven short squeeze, and sales at GameStop have declined through 2022 and the company remains unprofitable.
Cohen also held a stake in Bed Bath & Beyond, helping to fuel a boom in that stock before "pulling the rug out" on other shareholders and collecting an estimated $60 million profit.
Now what
Like other department store chains, Nordstrom has struggled of late, with sales falling 3.5% during the holiday season, and it slashed its full-year adjusted earnings per share guidance from $2.30 to $2.60 to $1.50 to $1.70.
Given his track record with GameStop and Bed Bath & Beyond, Cohen's move probably isn't the buy signal that bulls seem to think it is. We'll learn more when Nordstrom reports fourth-quarter earnings on March 2.
