Activist Ryan Cohen Targets a Familiar Foe at Nordstrom

It is unusual for activists to target companies in which a family controls so much of the stock. Mr. Cohen isn’t going after the Nordstrom family, which runs the company and owns about 30% of its shares, but rather Mr. Tritton, a Nordstrom director since April 2020 and chair of the board’s compensation committee.

Mr. Cohen argues that Mr. Tritton’s former employment at Nordstrom, where he worked from 2009 to 2016 overseeing the chain’s private-label brands, makes him conflicted and unqualified to set compensation. Mr. Tritton, a retail veteran who also worked at

Nike Inc.,

Timberland and

Target Corp.

, didn’t respond to a request for comment.

Mr. Cohen took aim at Bed Bath & Beyond’s compensation while Mr. Tritton was CEO, noting in a letter to the board in March last year that executives were collectively awarded nearly $36 million in the prior fiscal year—at a retailer that had consistently underperformed peers. He noted that Mr. Tritton’s compensation exceeded those of the chiefs of larger retailers, including

Kohl’s Corp.

and

Macy’s Inc.

Mr. Cohen also took issue with Mr. Tritton’s management of Bed Bath & Beyond, saying he had tried to pursue too many strategies at once and should have given priority to getting the right products on shelves during pandemic-induced supply-chain bottlenecks, instead of launching various private-label brands. Mr. Cohen suggested selling the Buybuy Baby chain, a move the board considered but decided against, because a separation would have been too time-consuming and costly, people close to the company have said.

Bed Bath & Beyond’s share price soared after Mr. Cohen disclosed his stake in March. Mr. Tritton was pushed out of Bed Bath & Beyond in June. The share price plunged after Mr. Cohen sold all his Bed Bath holdings in August, and the company is now preparing for a potential bankruptcy filing.

Nordstrom has likewise posted inconsistent results and lagged behind some of its rivals despite having a loyal customer base, said

Dylan Carden,

an analyst at William Blair. He said management has been distracted by costly and largely unsuccessful bets on new ventures, including Trunk Club, its Local format of smaller stores and the opening of its New York City flagship.

Mr. Carden also pointed out that Nordstrom’s off-price Rack business has experienced uneven performance in contrast with the supercharged growth of rivals such as T.J. Maxx.

“The biggest pushback we have gotten when we suggest the need for an activist is simply the 30% stake the Nordstrom family controls,” Mr. Carden wrote in a research report.

In January, Nordstrom said its sales during the holiday period declined and lowered its earnings guidance for the year-end quarter.

A Nordstrom spokeswoman said the company is open to hearing from Mr. Cohen and other investors. “We will continue to take actions that we believe are in the best interests of the company and our shareholders,” she said.

For now, investors can expect Nordstrom shares to go on a wild ride, similar to other so-called meme stocks that Mr. Cohen invested in, such as Bed Bath & Beyond and

GameStop Inc.

Over the past 12 months, Nordstrom shares fell 13.4% through Wednesday’s close. Since then they are up nearly 30%.

Write to Suzanne Kapner at [email protected]

It is unusual for activists to target companies in which a family controls so much of the stock. Mr. Cohen isn’t going after the Nordstrom family, which runs the company and owns about 30% of its shares, but rather Mr. Tritton, a Nordstrom director since April 2020 and chair of the board’s compensation committee.

Mr. Cohen argues that Mr. Tritton’s former employment at Nordstrom, where he worked from 2009 to 2016 overseeing the chain’s private-label brands, makes him conflicted and unqualified to set compensation. Mr. Tritton, a retail veteran who also worked at

Nike Inc.,

Timberland and

Target Corp.

, didn’t respond to a request for comment.

Mr. Cohen took aim at Bed Bath & Beyond’s compensation while Mr. Tritton was CEO, noting in a letter to the board in March last year that executives were collectively awarded nearly $36 million in the prior fiscal year—at a retailer that had consistently underperformed peers. He noted that Mr. Tritton’s compensation exceeded those of the chiefs of larger retailers, including

Kohl’s Corp.

and

Macy’s Inc.

Mr. Cohen also took issue with Mr. Tritton’s management of Bed Bath & Beyond, saying he had tried to pursue too many strategies at once and should have given priority to getting the right products on shelves during pandemic-induced supply-chain bottlenecks, instead of launching various private-label brands. Mr. Cohen suggested selling the Buybuy Baby chain, a move the board considered but decided against, because a separation would have been too time-consuming and costly, people close to the company have said.

Bed Bath & Beyond’s share price soared after Mr. Cohen disclosed his stake in March. Mr. Tritton was pushed out of Bed Bath & Beyond in June. The share price plunged after Mr. Cohen sold all his Bed Bath holdings in August, and the company is now preparing for a potential bankruptcy filing.

Nordstrom has likewise posted inconsistent results and lagged behind some of its rivals despite having a loyal customer base, said

Dylan Carden,

an analyst at William Blair. He said management has been distracted by costly and largely unsuccessful bets on new ventures, including Trunk Club, its Local format of smaller stores and the opening of its New York City flagship.

Mr. Carden also pointed out that Nordstrom’s off-price Rack business has experienced uneven performance in contrast with the supercharged growth of rivals such as T.J. Maxx.

“The biggest pushback we have gotten when we suggest the need for an activist is simply the 30% stake the Nordstrom family controls,” Mr. Carden wrote in a research report.

In January, Nordstrom said its sales during the holiday period declined and lowered its earnings guidance for the year-end quarter.

A Nordstrom spokeswoman said the company is open to hearing from Mr. Cohen and other investors. “We will continue to take actions that we believe are in the best interests of the company and our shareholders,” she said.

For now, investors can expect Nordstrom shares to go on a wild ride, similar to other so-called meme stocks that Mr. Cohen invested in, such as Bed Bath & Beyond and

GameStop Inc.

Over the past 12 months, Nordstrom shares fell 13.4% through Wednesday’s close. Since then they are up nearly 30%.

Write to Suzanne Kapner at [email protected]