A Nordstrom Buyout? The Lessons of J. Crew and Neiman Loom Large

Nordstrom Inc. shareholders are applauding a plan by its founding family to consider taking the department-store chain private.

But there are few recent examples of retail buyouts that went smoothly, raising questions about how the family could raise sufficient funds to execute a deal—and whether it should even try.

Retailers like J. Crew Group Inc. and Neiman Marcus Group Inc. went private in leveraged buyouts, hoping to re-emerge with an initial public offering. The IPOs were both scrapped after mall traffic dwindled and sales dropped off. Other former LBOs are in even worse shape: Claire’s Stores Inc., Gymboree Corp. and ...