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Nordstrom
terminates its
Ala Moana plans

The retailer says it couldn't
get approval from anchor
tenant Liberty House

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By Rick Daysog
Star-Bulletin

Nordstrom Inc. has shelved plans for its much-anticipated Ala Moana Center department store. And it's blaming Liberty House.

The Seattle-based retailer said today that it has been forced to abandon its plan to build a 268,000-square-foot department store after General Growth Management of Hawaii, Ala Moana's owner, could not obtain necessary approvals from anchor tenant Liberty House.

The announcement was made on the eve of Thursday's grand opening of the Nordstrom Rack at the Victoria Ward retail complex in Kakaako. The Ward store will be Nordstrom's first off-price outlet in Hawaii.

"We are extremely disappointed that we won't be going to Ala Moana," said Marty Wikstrom, president of Nordstrom's full-line stores.

"We've been serving customers in Hawaii for more than 34 years . . . and have wanted to open a full-line store in Honolulu for some time. That goal hasn't changed and we will work aggressively to find other opportunities in this community."

Nordstrom, which signed a letter of intent with General Growth in 1996, said Liberty House made it clear that it would not give its consent for the Ala Moana expansion plan when it sued General Growth earlier this year.

The suit, filed in federal court in Chicago, said the Nordstrom deal would violate the terms of Liberty House's lease with Ala Moana.

Blake Nordstrom, president of the Nordstrom Rack division, said his company worked hard with General Growth to get the project off the ground but could not convince Liberty House to sign off on the expansion.

Nordstrom, who is in town this week for the grand opening of the company's Ward outlet, said the company had already pushed back its timetable to open the Ala Moana store from this year to the year 2002.

Even if Nordstrom were to receive Liberty House's approval today, it would take three years to build a department store, he said.

Nordstrom said the Ala Moana department store would have employed between 700 and 1,000 workers. "We're not able to go forward and we couldn't continue with this dance. We need to get on with life," said Nordstrom, noting that his company's interest a Hawaii department store goes back to the late 1970s.

Although he expressed frustration with the process, Nordstrom said the company has not closed the door on eventually opening a department store in Hawaii. "We believe that competition is healthy and we believe that customers have the right to chose who they patronize."

For Liberty House, the dispute is not about competition, said John Monahan, Liberty House's president. Monahan said provisions in the Liberty House's 1963 lease with Ala Moana Center prohibit new retail construction beyond designated boundaries at the mall.

The Nordstrom department store, which was to have been built on the Kona Street side of the Ala Moana parking lot, would have extended beyond those borders.

"This was never about Nordstrom or any other tenant," Monahan said. "It's about our lease rights. Tenant protections are present in most leases and I'm sure Nordstrom has similar clauses in most of their leases."

Liberty House and Nordstrom have a long history. Nordstrom operated Liberty House's shoe department for about 30 years before Liberty House terminated the agreement in 1997, prompting the Seattle retailer to open two free-standing shoe stores at Ala Moana Center.

Nordstrom said it was terminated after it announced plans to open the Ala Moana department store. Liberty House said it made the move after Nordstrom declined to open a shoe store at its Kona location.

Nordstrom's decision to pull out of Ala Moana follows Saks Fifth Avenue's decision last year to drop its plans for a 150,000-square-foot department store at Victoria Ward Ltd.'s $200 million Kakaako shopping mall. Birmingham, Ala.-based Saks Inc.'s move, which was based on financial problems on the mainland, prompted the Ward group to scale back its ambitious retail plans.

Dwight Yoshimura, general manager at General Growth, meanwhile held out some hope that Nordstrom, Liberty House and General Growth could reach some agreement in the future. "At this time we're not able to proceed with the Nordstrom deal but hopefully in the near future we'll be able to include them in in the Ala Moana family," Yoshimura said.