Family structure nixed at Nordstrom

Through four generations, the Nordstroms strived to run their company as a family, attempting to give each member a comparable title and a broad say in how the clothing chain was operated.

This week, that philosophy officially ended when Nordstrom's board of directors approved the final step in a restructuring plan that did away with the six co-president positions, scattering the Nordstrom men who held those jobs hither and yon throughout the company.

"Within the new structure, business units are more independent from the corporate center, thus requiring less corporate-center leadership overall," said John Whitacre, the company's chief executive officer and chairman.

"Over the last year, the co-presidents increasingly acted in an advisory capacity. I believe all executives now have meaningful leadership positions where they can directly and positively impact company results."

Critics of the company say the old management structure was cumbersome and decisions took too long and were too centered in Seattle. Even the corporation's spokeswoman, Brooke White, concedes the jobs of co-president were more suited to a bygone era.

Analysts say they have seen the changes coming and welcomed a reorganization that gives the people in charge of purchasing and running the full-line stores final authority.

"Before, it was hard to know who had authority to make decisions," said Laurie Breidenbach, an analyst at Ragen MacKenzie in Seattle. "Members of the family are still involved in the business, but not in terms of having broad control."

Under the new structure announced yesterday, Marty Wikstrom was named president of the Full Line Store Group. Gail Cottle is president of the Nordstrom Product Group. Kevin Knight was named president of the company's Credit Group, and Blake Nordstrom is president of the Nordstrom Rack Group.

Dan Nordstrom relinquishes his responsibilities as co-president but will continue as chief executive officer and president of Nordstrom.com. Former co-presidents Erik Nordstrom and Pete Nordstrom were given the title of executive vice president. Erik Nordstrom will manage the Northwest region. Pete Nordstrom will be in charge of full-line-store merchandising strategy for everything but women's apparel.

Though he remained a co-president until yesterday, Bill Nordstrom assumed the title of East Coast general manager in May. Jim Nordstrom, who had been co-president over full-line stores and women's apparel, resigned earlier this month to help build start-up companies and a high-tech company he had invested in.

The fourth-generation Nordstroms are brothers and cousins.

The reorganization was announced on a day when Nordstrom posted a slightly higher than expected fourth-quarter profit of $66.55 million, or 50 cents a share, compared with an identical profit of $66.55 million, or 47 cents a share, in the year-earlier quarter. Sales climbed almost 6 percent to $1.53 billion from $1.45 billion.

For the year ended Jan. 31, profit was $202.6 million, or $1.46 a diluted share, down 2 percent from $206.7 million, or $1.41 a share, the previous year. The company said fiscal 1999 results were reduced $10 million from charges in the third quarter related mainly to work-force reductions and discontinued-project write-offs in information-technology services.

Before the charges, diluted earnings a share were up 6.4 percent to $1.50, company officials said. Sales for the year were up 1.9 percent to $5.1 billion from $5 billion.

Though sales at stores open 14 months or longer ended the year down 1.1 percent, that figure for the final quarter rose 2 percent. Such "same-store" sales are a key indicator of a retail company's strength and freshness.

"All we've been looking for is a positive trend. That was really important to see in the fourth quarter," said Breidenbach of Ragen MacKenzie. "The real test is going forward. Can they sustain that? It's really going to take a few more quarters to see how well it is working."

The market liked the news. Nordstrom stock was up $1.125, or 5.7 percent, to $21 at the close of trading today. The results came out after the market closed yesterday.

Whitacre said the fiscal-year-end numbers are indicative of the solid foundation the company has established with its reorganization.

"We are listening more closely to our customers in order to be more responsive to fashion trends and to make our stores easier and more fun to shop," he said.

That reference was to another Nordstrom's announcement yesterday that it was restructuring its largest division, women's apparel. Gone are two well-known departments in that division: Gallery and Town Square. Officials said some of the clothing there duplicated items found elsewhere. The popular brands from those two departments will be moved to other locations in the stores.

The stores are being reorganized to give them a more boutique feel and make them easier to navigate. Merchandise for women will be divided between classic, casual and modern.

Paula Stanley Weigand, director of public relations for the store division, says more modern fashions are being added to a mix that will eventually reach one-third classic, one-third everyday wear and one-third modern.

To attract shoppers back into Nordstrom stores, the company recently launched an edgy, yearlong $40 million national advertising campaign that asks people to rethink some of their preconceived notions about clothing and how a soccer mom or businessman should dress.

One of the magazine ads asks readers to "Reinvent the power suit." The ad shows a barefoot man, dressed in khaki shorts and an open denim shirt, lying on a couch studying a legal pad.

Last year, Nordstrom opened four full-line stores in Norfolk, Va.; Providence, R.I.; Mission Viejo, Calif.; and Columbia, Md. This year, the company expects to open full-line stores in Atlanta, Dallas, Denver, Sacramento, Chicago and Boca Raton, Fla., bringing the total number of full-line department stores to 77.

Robert T. Nelson's phone message number is 206-464-2996. His e-mail address is rnelson@seattletimes.com.