Nordstrom Paid $350 Million to Acquire Trunk Club

The recently acquired startup is not yet profitable.
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Lauren Indvik
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The recently acquired startup is not yet profitable.
Photo: Trunk Club

Photo: Trunk Club

Last month, Nordstrom announced that it had acquired Trunk Club, an online personal shopping service for men. In its second quarter earnings report on Thursday, the retailer revealed exactly how much it paid for the five-year-old company – $350 million in Nordstrom stock, plus a potential $100 million in incentives for Trunk Club's management in the coming years – and shared some interesting details about the startup's business.

Those details? 1) Trunk Club is doing about $50 million in annual sales and 2) It's not yet profitable. That said, Nordstrom expects Trunk Club will "achieve operational profitability and more than double its annual sales to $100 million." Nordstorm didn't say when it expected that to happen, however (we're guessing sometime in the next 12 months). The retailer expects the deal will close next quarter, and will reduce its earnings per diluted share by 3 to 5 percent at the end of the fiscal year.

Trunk Club will continue to operate as an independent company, but its operations will inform – that is, change – the way Nordstrom operates its own men's business, CEO Blake Nordstrom said in an earnings call. Trunk Club is "a terrific business and one we have been monitoring for some time," he said, adding that the company thought it would be less expensive and time-consuming to acquire Trunk Club than to build its own version of it.

As for that second quarter: Nordstrom generated $3.3 billion in sales, up 6.2 percent from the same period last year and in line with forecasts. The fastest-growing area of its business continues to be its outlet chain, Nordstrom Rack, which saw sales increase 18 percent to $114 million.