Retailer C&B's new CEO takes helm at a trying time

Lorna Nagler was conducting what she called the final inspection.

It was February, spring clothes were about to hit stores, and the new CEO of Christopher & Banks had gathered a team of merchants, marketers and sales people at the chain's Eden Prairie Center store, where it often tests new products and strategies.

As Nagler pulled cream yellow jackets and flowered skirts off the neatly lined racks, she wanted her people thinking about the clothes at hand and the ones not yet ordered. Have we highlighted the products that we know are sellers? Is there anything we don't like about how we've merchandised an outfit? What about the colors? What should we be doing differently next time?

"You have to understand what's going to motivate the customer," Nagler explains the process later. "If the product's right, we can usually get her attention, even in spite of reduced traffic."

Of course, Nagler is trying to get more than her customer's attention. Like all retailers, she's trying to pry open wallets at a time when people face more pressing worries over jobs, housing, and rising costs of food and fuel.

Nagler, 51, was named CEO of the 841-store chain in August, its fourth top executive in two years. She takes the helm at a particularly trying time. With overall consumer spending flat, women's clothing retailers have been especially hard hit.

And Christopher & Banks goes into the uncertainty with little momentum. Sales at existing stores have been down for the past three months.

The chain, which includes plus-sized C.J. Banks and upscale Acorn shops, is somewhat quirky as retailers go. It rarely advertises. It didn't sell products online until last month, years behind most chains. Yet a two-day sale Nagler masterminded offering employees' friends and family 40 percent off purchases pushed same-store sales up a whopping 22 percent in October. Another promotion is planned for April.

But Wall Street clearly doesn't expect much. In early March, Christopher & Banks stock fell 19 percent -- its largest one-day drop in a decade -- after announcing that a fourth-quarter loss could be wider than forecast. In the past year, its shares have dropped by half, to about $10.

Nagler, a Wisconsin native and avid Badger fan, has stepped into troubled retail waters before. She took the reins at Lane Bryant in 2004, at a time the company was losing sales over uninspiring and low-quality merchandise, and a lack of popular basics.

During 3 1/2 years there, she led an expansion into underpenetrated markets in strip and lifestyle centers, and oversaw the opening of more than 140 stores.

Net sales increased 18 percent during that time, though same-store sales decreased her final full year at the company, which included a 3 percent loss during the crucial holiday season.

Nagler is a retail veteran who has worked in department stores, discount stores and specialty stores. She's bought, managed or directed sales of merchandise for kids, men and women as well as jewelry, accessories and intimates.

Still, Wall Street hardly knows her; she's worked largely in the background as a division president at large retailers. But several analysts said they've been impressed so far.

"A year ago, they were awash in inventory," said Margaret Whitfield, an analyst with Sterne Agee & Leach in Birmingham, Ala. "She's put a focus on inventory control and slowing growth, which is wise from a number of fronts because of what's happening with the economy."

Analysts say her predecessor, Matthew Dillon, was a strong merchandiser who perhaps strayed too far from the core customer: a price-conscious shopper who likes novelty and fashion but puts a premium on comfort.

Nagler pushed for a more aggressive website rollout, which had been in the works. She scaled back new store openings by half, planning 30 to 40 new stores this year while closing 10.

"It's the first time we've had a well-rounded and grounded individual in place in some time," said Larry Barenbaum, chair of the Christopher & Banks board. "It was a real coup that we got her. Time will prove that she's the person we really need to get us to the next level."

Nagler's rise to the top echelons of the retail world has been methodical. She worked in brand strategies and merchandising at Kids 'R' Us in the mid-1990s. At Kmart she oversaw the successful rollout of a line of Sesame Street kids clothes and rose to senior vice-president and general merchandise manager for apparel and jewelry.

She worked at Kmart during the once-venerable retailer's darkest days. She was one of two dozen top executives who received millions in "retention loans" as the company was laying off 67,000 workers and hemorrhaging toward bankruptcy.

Nagler repaid the $750,000 loan when she left Kmart to become president of Catherines Stores in 2002. Integrity and ethics, Nagler said, are core values.

"The experience made me stronger and smarter," she said.

A retailing teen

As a teenager in Glendale, Wis., a suburb of Milwaukee, Nagler always loved clothes and fashion. While a junior in high school, she landed a spot on the teen board at the bygone Gimbels department store. She quickly realized the business side of retailing jazzed her as much as new shoes and jewelry.

The left-brain, right-brain balance came naturally. Her father ran a successful real estate company and served as Glendale's mayor. Her mother is a painter with her own studio.

Nagler attended the University of Wisconsin-Madison -- following in the footsteps of her grandparents, parents and two older siblings -- and graduated with a retailing degree.

She remains committed not only to cheering her alma mater to sports victories, but also to helping the school shape the next generation of retail executives.

She serves on an advisory board for the School of Human Ecology, along with six other high-ranking retail executives and Wisconsin grads.

Jerry O'Brien, a former Target recruiter who was hired to lead the school's Center for Retailing Excellence, said Nagler was the first committee member to ask for Web chats with retailing students.

An accidental hire

Nagler came to the company's attention last summer almost by accident, when chair Barenbaum was having lunch with Susan Connell, whom the chain had just hired from Lane Bryant as executive vice president and chief of merchandising. Barenbaum asked a somewhat predictable conversation starter about what she'd learned from her former boss.

Barenbaum said Connell's glowing report about her former boss -- Nagler, who had resigned recently from Lane Bryant -- got him interested.

He called her immediately. Nagler already had turned down other offers, and put him off at first.

Nagler said she took the job because she thinks Christopher & Banks has a solid footing in spicy casual wear, with jackets and essentials that cost half of what competitors Coldwater Creek, Chicos or Talbots charge. She still commutes during the week from Columbus, Ohio, where her husband lives, although she's finally getting enough footing in her new job that she's begun a home search here.

Although the Nagler-Connell imprint won't be apparent until late spring or summer, analysts expect an impact. Nagler wants to be more responsive to regional differences in merchandise, and get products into stores more quickly.

"Lorna brings a selling culture to the company, which is what it has lacked for a long time," said analyst Whitfield.

In her first seven months, Nagler has peppered regional, district and store managers with questions, drilled into the financials and sought ways to make the company more efficient in inventory, vendor relationships and staffing. Twice a month, she asks a group of front-line sales people and other nonexecutives what they'd do if they were CEO for a day.

Still to come: what to do with Acorn, the more upscale chain it bought in 2004. Nagler announced in March the company would take a $10.5 million charge, mostly stemming from write-downs related to Acorn assets.

Despite current economic challenges, Nagler believes Christopher & Banks has plenty of room to grow. It has identified 1,300 locations for expansion and is pushing into new markets in the Southeast and Southwest, where it may advertise for the first time to "raise our voices just a bit," she said.

She sees the most growth potential in C.J. Banks, the plus-sized brand. And starting in fall, petites will expand. Right now, they're sold in just 95 of the 546 Christopher & Banks stores.

The current headwinds, she said, "are just a pausing point ... and an opportunity to capture more market share."

Jackie Crosby • 612-673-7335