Retail Rules

REVIEW SUMMARY
Business. Bealls Inc., Bradenton
Industry. Retail
Key. Firm hired 32-year industry executive Lorna Nagler as president of the department store division in early 2011.

The prognosis was bleak at Christopher & Banks when Lorna Nagler took on the CEO role in August 2007.

Same-store sales at the chain of 800 women's apparel stores had been falling, while its inventory was rising — a messy combination on the verge of a recession. Income at the suburban Minneapolis-based publicly traded firm was down 20%. Shares of the company for the year were off by nearly 40%.

The fourth CEO at the firm in a two-year period, Nagler soon discovered even more trouble. Some poor commercial real estate decisions hampered the company's flexibility. Expenses in some departments exacerbated the declining sales issue. Morale in several divisions, unsurprisingly, was low.

Nagler plowed ahead. She used a subtle, yet solid leadership style to win the trust of dozens of high-level employees. She authorized some specific strategy alterations, from launching an outlet division to leading the design of a new store prototype to the formation of an e-commerce division. Nagler and a team of marketing personnel also created the company's first-ever customer loyalty program.

Now Nagler is onto a new challenge: She is president of the department store division at Bradenton-based Bealls Inc. It's less dire than what she faced at Christopher & Banks, but it's nonetheless cloaked with a heightened sense of pressure.

Nagler, 54, was named president of the 75-store division in early January. She replaces Lana Cain Krauter, who ran the division for nearly two years. Krauter took a job with her former employer, Sears, where she's now a senior vice president in charge of the apparel division.

With $1.12 billion in 2010 revenues, up 4.9% from 2009, when it had revenues of $1.07 billion, Bealls is one of the largest companies based in the Manatee-Sarasota region. But the department store division of Bealls, much like many other department store chains nationwide, has been stuck in the throes of the recession for several years.

And growth at Bealls' outlet stores division, which has 445 stores in 16 states, surpassed the department store division for the first time in the 2010 fiscal year.

“There's no question that the Florida economy is struggling a bit to find a way forward,” says Bealls Inc. CEO Steve Knopik, Nagler's boss. “That added to the fact that the department store space is more competitive than it was five years ago makes Lorna's job a little more difficult than it was.”

Five months into Nagler's tenure, however, Knopik has been impressed by her ability to take calculated risks while she empowers her staff to take their own risks. Nagler, says Knopik, also grasps the difficult balance between marketing merchandise and the technical day-to-day needs of a diverse business. Bealls' department stores are only in Florida, but are spread from Naples to Jacksonville and Boca Raton to Destin.

“Lorna is a very talented retail executive,” says Knopik. “She's extremely energetic and she seems to always be on a very positive keel.”

Get smart
Positive thinking was in short supply at Christopher & Banks back in 2007, when Nagler took the CEO job. “It was a very tough time,” says Nagler. “But I think everyone got smarter with the times.”

The company also got healthier under Nagler, at least in the short-term. Revenues, for example, rose 5.2% her first year as CEO, from $547.3 million in 2007 to $575.8 million in 2008, according to Securities and Exchange Commission filings.

The recession, though, continued to wear on Christopher & Banks, which has stores in 46 states. Revenues declined 7.8% in 2009 and 16% in 2010. The company also reported a few quarterly losses under Nagler, including the second quarter of 2010, when it lost $2.5 million. Shares of the company traded for less than $7 when Nagler left.

Still, Nagler left a lasting memory. “You don't find many CEOs with a heart, but she sees the good in people,” says Keith Pickens, who was chief information officer at Christopher & Banks under Nagler. “If I had a chance to work for her again, I would.”

Nagler's approach at Bealls mirrors her leadership style at Christopher & Banks: patience combined with decisiveness and humor mixed with compassion. “I think I listen well,” Nagler says. “I reserve the right to get smarter every day.”

Nagler says another key to her leadership style is gratitude. “No one ever doesn't appreciate a thank you,” says Nagler. “No one out grows that.”

Plus, people who know and have worked for Nagler say she has a keen sense of timing. For instance, she will sometimes leave a newspaper or magazine article with someone to illustrate a point that could help solve a certain problem.

“She knows how to make a situation better without telling people what to do,” says Kathy Kiewel, a New York-based retail executive who first worked with Nagler in the corporate office of Montgomery Ward, an Iowa-based department store chain. “And she doesn't take credit for it.”

Be happy
Nagler says the credit at Bealls will come for the entire department store division when it accomplishes several top goals.

One priority is to improve sales in a variety of women's clothing lines. Bealls executives decline to elaborate on any specific sales goals, though Knopik says women shoppers make up a “terrifically large portion of the store.”

Moreover, Nagler is an ardent follower of the retail adage that women shoppers hold the keys to the castle. “If you can keep the woman shopper happy, she buys for her husband, her kids and for others,” says Nagler. “Our products need to surprise and delight.”

Another priority is to grow the presence of Bealls department stores online, both on the e-commerce site and in social media. Nagler says 60% of Bealls' website users go to the site to look, but buy in the stores. So the site must deliver the right mix of merchandise, on top of the right message.

The website was recently updated under Nagler. A new platform was added in March, says Nagler, which shows merchandise much faster and is easier to use.

While the website looks into the future, Nagler has gone distinctly old school on the issue of how to deal with customer service issues. Several times in the last few months, for instance, Nagler has personally called customers who have written complaint letters. The method disarms customers, Nagler says, and is a pleasant surprise.

Another key point for Nagler early on is to not mess up what Bealls already has going for it. In particular, that would be the department store division's ability to successfully market itself as the Florida authority. It's an image fiercely protected by both employees and customers.

“There are people who call it 'my Bealls,'” says Nagler. “I don't know if anyone calls it 'my Kohls.'”

Move quickly
Kohl's is the latest of several competitors that want to beat Bealls in Florida. The Menomonee, Wis.-chain opened a store in east Manatee County a few years ago, for example, and it plans to open a store in south Sarasota County soon.

The competition will likely make Nagler work harder, say those who know her and have worked with her. Harder and faster. “It's unbelievable what she can accomplish in a short period of time,” says Pickens, the executive who worked under Nagler at Christopher & Banks.

Nagler was born in Glendale, Wis., a Milwaukee suburb. Her father was a local real estate developer and politician and was mayor of the town. Her mother was an artist. Nagler developed an interest in the business side of fashion at an early age, when she served on a teen board at a local department store.

Nagler's 32-year career in the industry has since included stops in executive roles at Kids “R” Us, Lane Bryant and Kmart, where she ran the apparel division. Nagler also turns her commitment to the field back to school, for a class she teaches every year on the retail industry at the University of Wisconsin. Says Nagler: “I'm pretty passionate about the business.”

The department store division's 4,200 employees will depend on that passion. So too will Knopik, Bealls' CEO. “Lorna is a bright woman,” says Knopik. “While the challenges seem daunting, she is enthused by the opportunity.”