KEN IGE / KIGE@STARBULLETIN.COM
Nordstrom plans a full department store at the
Ward retail complex. The firm has its Rack
outlet there, shown here yesterday.

Nordstrom
plans to expand

The retail outfit says it will open
its first isle department store
at the Ward complex

Company background

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By Rick Daysog
rdaysog@starbulletin.com

Nordstrom Inc. plans to open its first Hawaii department store in Kakaako, signaling a new era of competition in the island retail climate.

Victoria Ward Ltd. announced today that it has signed a letter of intent with Seattle-based Nordstrom for a 150,000 square-foot department store to anchor the local landowner's 65-acre entertainment and retail complex.

Victoria Ward also said that Nordstrom has signed a lease for a 16,500-square-foot shoe store at the Ewa end of the nearby Ward Centre. The new shoe store will replace Nordstrom's two footwear outlets at Ala Moana Center.

While the exact location of the proposed department store has not been decided, both companies have looked at the Ewa end of the Ward Warehouse as a potential site, people familiar with the deal said.

The Nordstrom department store, which is expected to cost about $150 million, is expected to open in the fall of 2005.

"Nordstrom will significantly enhance the quality and character of retailing in Hawaii," said Mitch D'Olier, Victoria Ward's chief executive officer. "And by making this commitment now, I believe Nordstrom is casting a strong and very welcome vote of confidence in Hawaii and the prospects for our state's economy."

To make way for the new department store, Victoria Ward said it will redevelop parts of the Ward Warehouse site and build new retail space for existing tenants. D'Olier said the company is looking to build 400,000 square feet of new retail space to accompany Nordstrom.

Victoria Ward also plans to build residential units nearby. Earlier this year, the company told state officials it was considering selling some of its land to make way for six residential high-rises.

The much-anticipated Nordstrom department store will bring new excitement to the local retail scene, which has been gearing up for Federated Department Stores' Thanksgiving week changeover of Liberty House to its Macy's brand.

Federated acquired Liberty House, the state's largest department store chain, in July for about $200 million after the local retailer emerged from three years of bankruptcy court protection.

Competition between Nordstrom and Macy's has been fierce in the markets that they share.

Nordstrom has had a long history in Hawaii.

The company operated Liberty House's shoe department for more than three decades before Liberty House terminated the agreement in 1997, prompting Nordstrom to open two free-standing footwear outlets at Ala Moana Center.

In 1996, Nordstrom signed a letter of intent with General Growth Management of Hawaii to open a 268,000-square-foot department store on the Kona Street side of Ala Moana Center.

But the deal unraveled last year after General Growth was unable to obtain approvals from Liberty House. Liberty House previously filed a federal lawsuit in Chicago, saying Nordstrom's agreement with Ala Moana Center would violate the terms of its lease.

For Victoria Ward, the Nordstrom department store adds a major piece to its ambitious redevelopment plans.

The landowner, founded in 1930, completed Consolidated Theatre's 16-screen Ward Theatre Complex in May and recently opened Dave & Buster's, an arcade-themed restaurant.

It secured Nordstrom Rack, the off-price retail store, as a tenant last year.

Those developments came after Victoria Ward and former partner Simon DeBartolo Group Inc. of Indianapolis shelved plans for a $200 million retail and entertainment complex, anchored by a 150,000-square-foot Saks Fifth Avenue department store.

Saks Fifth Avenue pulled out in 1999 after its parent ran into financial troubles and Victoria Ward was unable to obtain public financing from the state Legislature for a large-scale parking structure.

"The redevelopment of Ward Centers is an incredibly exciting project and we believe it will offer customers a strong retail environment," said Blake Nordstrom, the retailer's president.

The Nordstrom deal offers positive news for Hawaii's retail market, which has been rocked by the post-Sept. 11 tourism downturn.

One of the state's oldest retailers, Chun Kim Chow Ltd., is closing its doors after 93 years in business and will lay off 238 employees, according to state records.

The company had owned a number of local retail shops, including Ethel's Dress Shop and a number of brand-name shoe store outlets.

In October, DFS Galleria, which caters to the high-end visitor market, laid off about 70 workers in response to the weak tourism arrivals.

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Nordstrom Inc. facts >> Founded: 1901 >> Chairman: Bruce Nordstrom >> Corporate headquarters: Seattle >> Number of department stores: 80 >> Employees: 43,000 (85 in Hawaii) >> 2000 sales: $5.5 billion >> Hawaii operations: 34,000-square-foot Nordstrom Rack off-price outlet at Ward Villages, and two Nordstrom shoe stores totaling 22,000 square feet at Ala Moana Center Victoria Ward Ltd. facts >> Founded: 1930 >> Chief executive officer: Mitch D'Olier >> Land area: 65 acres >> Retail space at Ward entertainment retail complex: 400,000 square feet >> Annual sales: $28.6 million >> Number of retail tenants: 120 >> Anchors: Borders Book Music & Cafe, The Sports Authority, Nordstrom Rack, Dave & Buster's, Consolidated Ward 16 Theatres