While Cincinnati is shocked by Nordstrom's recent deal-breaking decisions not to open shop in two tri-state locations, Wall Street isn't. The New York firm Credit Suisse First Boston Corp. said it expects a series of announcements from the Seattle-based family retail company and the recent retreats could be “part of a larger strategy to reassess its use of capital going forward.”
Declining profits and lackluster sales are suspect for souring what many initially thought to be a sweet deal. Cincinnati – a city eager for the upscale, service-rich department store – was prepared to offer a $50 million incentive package in spring for a downtown location. Also in the works was a deal to anchor a new mall in a nearby Cincinnati suburb. Almost two weeks ago, Nordstrom ended discussions surrounding construction of a new downtown store. Yesterday, it pulled the plug on the suburban Deerfield Township, Ohio, commitment, too.
While Nordstrom has stated its intent to focus on more profitable stores, there have been no announcements derailing proposals to build stores in Columbus, Ohio, and Louisville, Ky. Yesterday, Nordstrom also announced plans for a new store in Palm Beach, Fla.
The decision to abandon Cincinnati, at least for the time being, came from Nordstrom's new management team. In late summer, John Whitacre, the first non-Nordstrom to lead the organization in its 100-year history, resigned. In his place, Blake Nordstrom was named president and Bruce Nordstrom was named ceo.
The retailer posted lower-than-expected second and third quarter sales. Since June, Nordstrom shares dropped from the $25 range to around $15, but gained an additional $1.12 1Ú2 (for $17.12 1Ú2 ) yesterday.