Nordstrom CEO, CFO Quit; Blake Nordstrom Takes Helm (Update2)
By Heather Landy
Seattle, Aug. 31 (Bloomberg) -- Nordstrom Inc., an upscale retailer whose stock has lost half its value the past four months, said Chairman and Chief Executive John Whitacre quit and Blake Nordstrom and Bruce Nordstrom, two family members, will take his place.
Chief Financial Officer Michael Stein also resigned, the company said. Blake Nordstrom, 39, was named president of the department-store chain and will select a new chief financial officer. Bruce Nordstrom, 66, was named chairman.
Nordstrom has struggled to remake its image after fashion missteps and inventory problems alienated shoppers and hurt profit. The average growth in annual net income was little changed the past five years. Changes in store layout and the way Nordstrom buys goods haven't helped to revive earnings. Second-quarter profit fell 36 percent. The stock has dropped from a 52-week high of 34 1/2 in April.
``There's a real chance that with the right person, they can get (the stores) into shape, resume growth and get the stock back in the $30 to $40 level,'' said Mitch Julius, managing director of Canyon Capital Advisors LLC, which held 65,000 shares as of June.
Fix Existing Stores
The first step for the new management team is to fix the existing stores, Julius said. Nordstrom, which operates 75 department stores, has ample opportunity for expansion, he said.
Annual net-income growth has declined an average 0.04 percent the past five years, according to Bloomberg data. Sales at stores open at least a year have fallen in four of the past six quarters at Nordstrom, which is known best for its customer service and pianists who perform each day in the stores.
``Clearly the Nordstrom family was disappointed with the lack of progress,'' said Deutsche Banc analyst Joseph Grillo, who has a ``hold'' rating on the stock. ``While Nordstrom still has a very strong brand name, they have not been able to implement steady same-store sales growth.''
Shares of Nordstrom, which traces its roots to the shoe store that John Nordstrom opened in 1901, fell 1.13 to 17.25 on the New York Stock Exchange. The management changes were announced after the close of regular U.S. trading.
Whitacre, 47, joined Nordstrom in 1976 as a shoe salesman while attending college. He held several executive posts before becoming co-chairman in 1995 and sole chairman in 1996. He was named chief executive in 1997. Stein, 51, a former Marriott International Inc. executive, joined Nordstrom in October 1998.
``New leadership will bring an energized responsiveness necessary to maintain a strong focus on customers, while pushing Nordstrom to higher levels of profitability,'' Enrique Hernandez Jr., a newly appointed Nordstrom director, said in a statement.
The Nordstroms
Blake Nordstrom, a fourth-generation family member of the company's founder, has served his family's business as a stock boy, salesperson, buyer and store manager, among other positions. He became a co-president of the company in 1995, along with five Nordstrom brothers and cousins.
In February, Whitacre abolished the office of co-president and reorganized the company into five divisions, each with its own president. Blake Nordstrom ran the Nordstrom Rack Group, the company's chain of outlet stores. He held 892,075 Nordstrom shares as of March, according to filings.
Nordstrom said it hired a national search firm and considered several candidates from outside the company. The search ``led the board to believe that Blake Nordstrom was the most well-suited candidate,'' the company said in a statement.
Bruce Nordstrom, a third-generation family member, most recently served the company as a director. He joined the business in the 1940s and became president in 1963. He and three cousins took the chain public in 1971 and retired as co-chairmen in 1995.
Nordstrom officials couldn't be reached for further comment.
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