The Man Behind The Store

He's one of the most successful entrepreneurs the Northwest has produced, yet most people aren't aware that there is a real Jay Jacobs.

They know his stores, distinguished by the loopy signature that, in fact, is his own. Now 82, Jacobs is a private man with a public company who has purposely kept a low profile, sometimes even steering people away from making the connection between the man and the store.

Yet, his accomplishments are notable. A savvy retailer from Seattle who was one of the first in the country to recognize the buying power of teenagers, Jacobs built an empire of juniors apparel stores that were the last word in teen fashion in the 1960s and '70s. By 1992, the chain had 287 stores stretching from Alaska to Florida.

Jacobs was an innovator, one of the first specialty retailers - some say the first - to have manufacturers create garments to his company's specifications and design, called private-label retailing. And among specialty retailers, he also pioneered foreign sourcing, looking to Asia for manufacturers.

Now, Jacobs swears he is stepping back from the business after shepherding it through the most painful step of his half-century-plus career in retailing - a Chapter 11 bankruptcy protection filing last May. The company was in the black, listing $9.5 million in unsecured debt and $32.2 million in assets, but filed to get out of onerous store leases that eventually would have sunk it.

Since the filing, more than 100 stores have been closed. And since the company went public in 1987, the stock price has dropped from a high of $15.50 that year to about $1 today, down 94 percent.

Jay Jacobs is putting together a reorganization plan and hopes to emerge from Chapter 11 by fall.

Whether Jacobs actually will back off is uncertain. Critics say Jacobs, who is remarkably sharp and youthful, helped put the company in its present dilemma by refusing to let his executives run the store. They say he should have stepped aside years ago.

"He may have stayed too long at the fair," says Alan Millstein, publisher of the Fashion Network News, saying it's difficult for a business to move forward when its chief executive officer is being second-guessed.

Not all are certain that Jacobs should have gone or left things alone. "If he was a hands-off guy, maybe it would have been worse," says Craig Bohman, former company president, who resigned when the company filed for bankruptcy protection. "Who knows?"

At any rate, that's history. Now the concern is whether the company Jacobs founded in the 1940s can survive in the long run, given its current condition, the oversaturation of stores in the country and consumers' declining interest in apparel.

Jacobs is a self-made man. Born Julius Jay Jacobs in Brooklyn, he moved to Seattle as a child after his father started work in a brother's menswear store. The store, S. Jacobs Furnishings, was at Second and Main down by the railroad tracks, and, says Jacobs' daughter Judy, did not provide a good living for the family.

He went without new shoes, she recalls her father saying. And his dog died because the family couldn't afford a veterinarian.

Perhaps that early deprivation helps explain Jacobs' penny-pinching in some areas - he lunches on leftovers, uses scrap paper for note pads and, former insiders say, insisted the company withhold payments to suppliers for an exceptionally long time.

Still, those close to him say Jacobs can be generous. He pampers longtime managers, paying them well, giving them personal loans, urging them not to overwork and sending flowers when they're sick. Also, for years after his first wife, Rose, died of cancer in 1978, he gave the equivalent of 5 percent of the company's annual sales to the Fred Hutchinson Cancer Research Center.

Jacobs himself says his father made money but "wanted me to make my own." So he worked as a bookkeeper to put himself through the University of Washington (after graduating from Garfield High School), where he majored in business and started law school. But money ran short, so he quit school to work at The Bon Marche, selling furs in the middle of the Depression.

That may sound like an unpromising career path. Not for Jacobs. He studied pattern-making, created a custom mink department and soon moved on, purchasing a one-third interest in Coe Brothers, a downtown furrier, in 1941. Despite his minority share, he insisted on changing the company name to Jay Jacobs so his clients could follow him. Not long afterward, he bought out his partners.

By that time, though, the fur business was starting to bore him. Jacobs had sold a wide variety of furs at The Bon, but now, everyone wanted nothing but mink. Next door was a women's accessories shop, Bertha Harris, whose goods he found more interesting - strands of artificial pearls for $1, beaded handbags and costume jewelry of all kinds.

The business also was more lucrative. Jacobs bought the store and sold the fur business. He added women's clothing after a vendor, miffed at the treatment his goods were given at a neighboring store, Frederick & Nelson, offered to supply Jacobs instead. And so Jay Jacobs, apparel store, was born - not by plan, but by happenstance.

Concerned with details

By most accounts, Jacobs has ruled his retail realm like a benevolent tyrant.

"He's someone who had to have his fingers in every aspect of the business," says Doris Williams, company senior vice president for administration, who has worked for Jay Jacobs since 1968.

For many years he never took a vacation longer than about a week and was the first one in the office in the morning. During the 1970s, when the chain had more than a dozen stores, he still ran store meetings at the downtown store - a job usually left to store managers - and insisted on personally approving all apparel orders, as many as 400 a year.

He wielded his authority like a weapon. A former personnel director and family friend, Robin Home, remembers arguing with Jacobs over whether a certain sales clerk should be fired. Home defended the clerk.

"Then you pay her," Jacobs snapped, ending the discussion.

As the number of stores climbed into the hundreds, and Jacobs' time was taken with more pressing issues, he still fidgeted over details. Walking through the downtown store, he would check to see which dresses were in the windows (and often ordered them changed) or summon a store manager with a jerk of his head, pointing to a rack to be straightened or a scrap of paper to be picked up.

Jacobs now spends December through April at his Palm Springs, Calif., home, golfing frequently, taking vigorous walks and working out with weights. A former high-school and college football player, he also was an athletic-club handball champion. He gave up the sport after he wore out a hip replacement and his doctor refused to do another unless Jacobs eased up.

Even when he's out of town, Jacobs returns for board meetings. And twice daily - beginning with a call at precisely 8:31 each morning - he phones Williams, checking on sales, inventories and anything else he can think of.

Rex Steffey, the company's current president, notes that entrepreneurs like Jacobs often are intensely interested in every aspect of the business. He quotes a saying in retail, "Retail is detail," to which Jacobs no doubt adheres.

Even today, Steffey says, Jacobs maintains strong opinions on anything to do with the business. Such as?

"Oh," Steffey says, with a smile, "what color the carpet ought to be and what dress should be in the window. What color the signs should be. Whether we should change the filter in the air conditioner. . . ."

A pit stop for teens

Back when most consumers still shopped in department stores and most department stores gave teenagers short shrift, Jacobs was among a handful of retail leaders nationwide who spotted the emerging market - fueled by the bulge of baby boomers reaching adolescence - and shrewdly targeted that specialty niche.

"He was right on top in the juniors business, a marketing maven," recalls Gene Kule, president of Silk Club, an apparel manufacturer and one of Jacobs' suppliers back then.

During the 1960s and '70s, Jay Jacobs stores were the required pit stop for fashion-wise teenagers cruising for everything from Nehru jackets to hip huggers and hot pants.

Through the years, teens' transistor radios blared the company jingle, "The Swinging Chicks Go Jay Jacobs" and the company's stylish and brightly colored bus cards became collectors items. The chain seemed to have cornered the market on hot pink, which appeared on signs, displays and shopping bags borne prominently by those wanting to appear hip.

Up in his rather spartan office, overlooking the intersection of Fifth Avenue and Pine Street, Jacobs pages though a slew of company scrapbooks stuffed with faded newspaper clippings and memorabilia from those highflying years. Ads from the early '60s, featuring a model with a Jackie Kennedy hairstyle, wearing a knit dress selling for $13.98. Photographs of teenagers daubing on makeup at Jay Jacobs-sponsored charm schools. A newspaper clipping noting the grand opening of the Bellevue Square store in 1969.

"This is the bag we had," Jacobs says, unfolding a yellowing, rumpled bag with his distinctive, hot-pink signature inside one scrapbook. "We had paper bags," he says. A note of disapproval creeps into his voice as he adds: "Now we use that other stuff."

Jacobs hauls out a copy of a transit ad from the 1970s featuring a lanky mannequin attired in bright, bell-bottom pants. He studies it a moment, remembering.

"Oh," he says, a fond smile growing on his face. "This was quite exciting."

The son-in-law

Doug Swerland joined the company in 1969. The husband of Jacobs' daughter Shelley, Swerland had worked in retail before graduating from the University of Washington with a degree in business and going to work for Jay Jacobs.

He got no preferential treatment, Swerland says.

"The first day I went to work for Jay, he stuck a broom in my hand. I was out sweeping the sidewalks in front of the store."

Swerland eventually became company president in 1978. But although Swerland - who left the company in November 1983 - says little about his relationship with his father-in-law, others say the personable and easygoing Swerland often was frustrated by his iron-handed father-in-law, who reversed his decisions, undermining his authority.

At one point, in the mid-1980s, Swerland hired J'Amy Owens, now head of a Seattle retail consulting firm, as the company's director of visual merchandising. After a quick, introductory tour of dozens of stores, Owens gave her report to Swerland and Jacobs.

She described stores in chaos - mannequins without hands or arms, dead plants in display windows, a store manager caught red-handed with stolen goods. In the middle of her presentation, Jacobs summarily fired her.

"He said, `Young lady, we did not hire you to be the police of this company. Will you please leave,' " recalls Owens, who had moved from California to take the job and worked for the company only two weeks.

If company merchandise managers and buyers were not immediately available when he wanted them, Jacobs often sidestepped them, calling their assistants into his office to show him planned purchases. Then he would go through their choices, approving some, vetoing others.

That kind of behavior riled company executives, who felt undermined, recalls Bohman, who started as comptroller in 1977, became chief financial officer and replaced Swerland as president.

"I don't think Jay ever realized the effect on the organization," says Bohman, now the chief financial officer for Savi, Doug and Shelley Swerland's new outlet apparel venture. But when he and Swerland complained, "(Jacobs) sloughed it off," Bohman says. "He'd say, `Yeah, I shouldn't do that.' Then he'd do that the next day."

Jacobs has changed in recent years. Gone are the tongue-lashings he sometimes used to give buyers, sending them from his office pale and trembling. He still gets up three or four times a night, goes to his dressing room and writes down ideas for the company in a steno book. But, under orders from the board of directors, Jacobs has been giving executives a longer leash.

A more likable side of Jacobs, whom many say is "charming when he wants to be" and "charismatic," has emerged. When executives are under the weather, they often find Jacobs at their door, proffering a tissue with a non-prescription pill. Sore throat? Jacobs will brew a cup of tea with honey for them. Bad back? He'll lie on the floor to demonstrate back exercises that have helped him.

In the spring, he brings dogwood blossoms or camellias for Williams, his right-hand woman.

"He's kind of a steel-covered marshmallow," Williams says.

Jacobs' second wife, Marjorie, says he is generous, writes "beautiful poetry" for her and picks flowers for her all the time.

"People that are afraid of him don't know him," she says, sitting in the couple's modest but well-appointed Washington Park home. "But I think that's because he doesn't let them."

Hurt by changing fashion trends

Since the late 1980s, the company has swelled as it scooped up stores, buying a chain here, opening stores there, in an expansion eventually blamed for the company's downfall. Critics say the company bought stores it shouldn't have and paid too much for leases.

Still, virtually every major chain aimed at the juniors fashion market has been in bankruptcy court in recent years, devastated by fashion trends such as grunge and its second-hand look, deserted in droves by young people who don't have much disposable income and don't care about traditionally fashionable clothes.

There also was competition from the likes of The Gap, which carried the banner for basic clothing, and The Limited. Not to mention the belated development of special juniors sections by department stores, which also took business away.

And somehow, somewhere, Jay Jacobs stalled, hesitated, changed its target market too many times and lost its customers.

In retrospect, it wasn't the time to expand. Although some blame Swerland's "buying spree" for the overexpansion, Bohman and others note that every lease needed the approval of the company's real-estate committee. It included Jacobs, who remains the company's chairman, owns or controls 59 percent of the company's stock and has a veto on proposals.

Jacobs, though, says he often refrained from using his vote. In retrospect, that may have been a mistake, he says.

"Maybe, just maybe, that's why we got all these extra stores that we shouldn't have in the '80s."

Former company executives felt the leases were reasonable, given expected sales. The company paid no more, and sometimes less, than other tenants in the malls, they say.

After Swerland left and Bohman took over in November 1993, the board told Jacobs to step back and give Bohman a chance to run the company. Bohman, who left six months later, when the company went into bankruptcy proceedings, says Jacobs left him alone during his brief tenure.

With Bohman's departure, Jacobs stepped back in, this time as president and chief executive officer, to lead the company through the reorganization. It was an extremely difficult time, given the many store closures and layoffs. Those close to him say the closings upset Jacobs, who believed the company had failed the stores and worried about employees who were laid off.

At the same time, Jacobs had worries of his own. Last summer, he came down with pneumonia and employees noticed that he seemed particularly drawn and tired by midafternoons. The business he had founded, and nurtured through the years, seemed to have become more of a burden than a joy, and the company revealed that it had hired an investment banking firm to sniff out potential buyers.

Then, in late September, Jacobs announced that the business was not going to be sold. In fact, it was naming a new president, Steffey.

Steffey says that he got a pledge from Jacobs to let him run the day-to-day business and that he's been keeping it. Jacobs is still in Palm Springs, but when April rolls around and he returns to Seattle, he's not sure what role he'll play, besides attending monthly board meetings.

That, he says, is up to Steffey.

"I'm not going to do anything to obstruct his going forward in the fashion that he wants," he says.

As to why someone of his age keeps working when he doesn't have to, Jacobs grows thoughtful.

"Maybe it's just because the old horse goes back to the barn and the old Jay Jacobs goes back to his office every day," he says, after a pause.

"It's become a habit and also something I look forward to. I wouldn't be working . . . if it wasn't something I was interested in."

KEY EVENTS -------------------------------

-- 1941: Jay Jacobs purchases interest in Coe Brothers, a furrier, and changes its name to Jay Jacobs.

-- 1959: Jay Jacobs incorporated in Washington.

-- 1977: Wholesale division organized.

-- May 1987: Jay Jacobs stock goes public.

-- 1991: Major acquisition - purchase of 74 Ups `N Downs stores from U.S. Shoe Corp.

-- November 1993: Doug Swerland, president and chief operating officer, leaves; Craig Bohman (then chief financial officer) becomes president and and chief executive officer.

-- May 13, 1994: Jay Jacobs files for bankruptcy reorganization; Bohman resigns and his duties assumed by Jacobs.

-- Sept. 27, 1994: Rex Steffey named president and chief executive officer.