End of a Nordstrom era

In the late 1970s, when the Nordstroms sought to expand into California, they were told not to expect their Northwest-style customer-service "shtick" to work on this sophisticated crowd.

Rather than shy away, they doubled the size of the store planned there, figuring if they went down, it would be with all guns blazing.

"It really fired our competitive juices," Bruce Nordstrom recalled Tuesday during his last annual shareholders meeting as chairman.

On the cusp of its 100th full-line store opening, the company bid adieu to Bruce and his cousin John, a long-time director and retired co-chair. "Something about age," Bruce quipped.

The pair represented the last of the third generation to run the company founded in 1901 by Swedish immigrant John W. Nordstrom. They are credited with transforming the Northwest icon and its legendary customer-service focus into a fashion retailer emulated throughout the country.

In a reserved tribute — the Nordstroms are known to shun public attention — Bruce Nordstrom thanked John for their 40 years together on the board. "We were indeed partners all this time," he said.

The third generation — most of whom began working in the stockroom sweeping floors before they were ever allowed near a foot — assumed leadership in 1968, but not without first pleading for the right.

Their fathers — Everett, Elmer and Lloyd — nearly sold the company to retailer Broadway-Hale to free up their hard-earned retirement money. After the Depression era, the second generation was said to arrive early each morning to wash the storefront windows and vacuum the carpets.

The third generation — Bruce, John, James, son-in-law Jack McMillan and family friend Bob Bender — offered up a detailed business plan, one that included selling its shares to the public, according to the book, "The Nordstrom Way."

The second generation relented, and Nordstrom went public in August 1971 with the third generation at the helm. Two years later, company sales surpassed $100 million, making Nordstrom the West Coast's largest-volume fashion-specialty store.

Retail expert Dick Outcalt, of Outcalt and Johnson, said Nordstrom built a reputation first and foremost as a shoe store, offering an unprecedented assortment of styles, sizes and prices.

Its other lasting decision was to treat the customer with respect. "If somebody says, 'I've tried these shoes out, they're just not comfortable,' it's respect that takes over," Outcalt said of the company's liberal return policy. "It says: 'I believe you. Let's make a change here.' "

The third generation retired Tuesday on a high note, one five years in the making.

Bruce Nordstrom emerged from retirement in August 2000 to resume the role as company chairman after Nordstrom launched a "Re-Invent" yourself campaign that fizzled with its core customers.

Amid slowing sales and profits, the company invested in an inventory system that helped buyers and salespeople make smarter decisions about what it sells. Choosing handbags, designer jeans and shoes in the right styles, quantities and colors has enabled it to sell more of these items at full price.

The fourth generation also assumed key leadership roles at the time: Blake Nordstrom, as president; Erik Nordstrom, as president of full-line stores; and Pete Nordstrom, as president of full-line merchandising. All three are sons of Bruce.

Financial analysts weren't sure the younger generation could deliver, said Robert Spector, who co-authored "The Nordstrom Way."

"[Blake] would talk about renewing the emphasis on customer service and they would think it's just a bunch of platitudes," Spector said.

Nordstrom last year posted a profit of $551.3 million, or $1.98 a share, on sales of $7.7 billion. Since 2003, its stock is up 380 percent. It closed Tuesday at $34.67, up 8 cents.

In a business with highly perishable inventory — today's hot handbag is tomorrow's discount item — Nordstrom sold and replenished its inventory 4.84 times last fiscal year, up from 4.51 times the year before.

The company, meanwhile, has significantly lowered its debt-to-capital ratio and hasn't borrowed to run its stores in four years.

Blake Nordstrom told shareholders Tuesday that while his father and John Nordstrom plan to retire from the board, they will still have offices at the company's headquarters and will be looked to for counsel.

The board elected Enrique Hernandez Jr., 50, its new, non-executive chairman. Hernandez, a nine-year independent director, is the third nonfamily member to serve as chairman.

The company also announced it will buy back $1 billion in stock within the next three years.

During a question-and-answer session with shareholders, a longtime customer said she was happy Nordstrom "destroyed" the East Coast competition, drawing laughs from the audience.

"Mr. Bruce, she said, "you did something right."

Monica Soto Ouchi: 206-515-5632 or msoto@seattletimes.com