Nordstrom Restores Founding Family Members in Shake-Up
Nordstrom Inc. Thursday restored members of the founding Nordstrom family to top management spots in a shake-up that saw the chief executive and chief financial officer quit after recent earnings and sales disappointments.
The upscale retailer said Chairman and CEO John Whitacre and CFO Michael Stein are leaving the company, effective immediately.
Blake Nordstrom, 39, a fourth-generation member of the family that founded the Seattle-based retailer, was named president and third-generation family member Bruce Nordstrom, 66, was named chairman. Bruce Nordstrom retired as co-chairman of the company in 1995.
Nordstrom shares, which were largely unchanged for most of the day, suddenly dropped minutes before the close of trading on the New York Stock Exchange as the reshuffle was announced. The stock fell as low as $14 in after-hours trading, but ended at $18, down 38 cents for the day. The price has fallen from a 52-week high of $34.50, and hit a year low of $16.56 last month after the company reported a disappointing quarter.
The company has begun searching internally and externally for a new chief financial officer, and is eliminating the CEO title, a position that was created at Nordstrom just three years ago after 95 years of doing without it.
Many of the typical CEO duties will go to Blake Nordstrom.
“It’s no secret that we are not hitting the ball out of the park. We are not excelling,” Blake Nordstrom told reporters in a news conference in a hotel down the street from the company’s flagship store in downtown Seattle.
Started by Swedish immigrant John W. Nordstrom in 1901, the company was run privately by the family until 1971, when they took the business public.
In 1995, the third generation of Nordstrom family members, and a former brother-in-law, resigned as co-chairmen, handing the reins of the company to Whitacre and Ray Johnson. When Johnson retired in 1996, Whitacre became full chairman and then in 1997, CEO.
Whitacre, 47, joined Nordstrom in 1976 as a shoe salesman.
Nordstrom said the retailer needs to improve some of its inventory and merchandise management, as well as other back-office systems. Some financial analysts have expressed concern in the past that the company was not adapting quickly to new technologies that could help manage merchandise.
“We believe new leadership will bring an energized responsiveness necessary to maintain a strong focus on customers, while pushing Nordstrom to higher levels of profitability,” said Enrique Hernandez Jr.
Hernandez is a newly appointed lead independent director for Nordstrom.
He said the board has been disappointed in the company’s performance for the last few years. “We are now at the point where we believe the company would benefit from a different style of leadership.”
Company officials added that they were “absolutely and fully committed” to remaining an independent company.
Earlier this month, Nordstrom reported a 27% decline in second-quarter operating earnings on disappointing sales, heavy markdowns and higher expenses.
Bruce Nordstrom was most recently a director of the company. Blake Nordstrom began his career with the company in 1974 and has served in many different positions, including stock person, salesperson, buyer, merchandise manager and store manager.
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Discount Days
Nordstrom’s shares (ticker symbol: JWN) have tumbled to a multiyear low amid concerns about the company’s growth outlook.
Quarterly closes and latest for Nordstrom on the NYSE
Thursday: $18, down 38 cents
Source: Bloomberg News
