Nordstrom Inc. is consulting with AlixPartners to review options for its off-price Nordstrom Rack business, according to people with knowledge of the situation.

The advisers are looking at potentially spinning off Nordstrom Rack into a separate company and whether that would entail two management teams and individual public reporting, said the people, who asked not to be identified because the matter is private.

Nordstrom is “not satisfied at all” with the recovery of Nordstrom Rack, which didn’t offer enough premium brands and had more lower-priced products than its customers wanted, Chief Executive Officer Erik Nordstrom said during a third-quarter earnings call last month. In response, the retailer has engaged external consultants to help improve Nordstrom Rack’s performance and boost profitability, he said.

Nordstrom is joining other retailers rethinking their businesses as online spending grows amid the pandemic. Macy’s Inc. hired AlixPartners to evaluate its online operations at the behest of activist shareholder Jana Partners, which valued the digital business at about $14 billion. That followed rival department-store chain Saks Fifth Avenue’s move to separate the e-commerce business of Saks Off 5th into a standalone company.

Representatives from Nordstrom and AlixPartners declined to comment.

For the quarter ended October 30, net sales for Nordstrom Rack totaled $1.19 billion, up 35 percent year-over-year but down 8 percent from 2019.

Nordstrom Rack’s top 50 brands made up 42 percent of sales year-to-date, compared to roughly 50 percent in 2019, Nordstrom said during the call. The company is increasingly buying more items and holding a portion to use in times of high demand or tight supply, he said.

By Rachel Butt

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