Nordstrom’s ‘glow-up’: How going private is helping the retailer thrive as Saks Global languishes
If Pete Nordstrom has a pep in his step as he gives a tour of his family’s luxury department store flagship in Manhattan, it’s because he is starting to see signs that his executive team’s efforts to rejuvenate the 125-year-old retailer are working.
As he walks the store’s street-level floor, he proudly shows off the recent overhaul of the beauty section: While Nordstrom still offers the decades-old department store counter service, it has added a lot of the self-service, discovery-centered style favored by shoppers at Sephora and its ilk. The beauty section still stocks the luxury brands you’d expect, but has added hip, less pricey items to help Nordstrom reach a wider clientele.
“We thought, ‘Let’s create more authority,’” says Nordstrom, who serves as co-CEO with his brother Erik. “The store feeling good and feeling energetic is in large part because we’ve improved our beauty.”
There are other signs in the store of Nordstrom finding its mojo again in the nearly one year since the family and a Mexican investor took the retailer off the stock market. There is an overhauled, much larger jewelry section on the same floor, as well as a two-level, design-y brand-showcase section called “The Gift Shop at The Corner” that changes every month, prominently placed at the busy intersection of Broadway and 57th.
The glow-up at Nordstrom’s flagship, along with upgrades at many of its other 89 department stores and its resurgent discount “Rack” chain, has helped fuel the retailer’s return to form after some difficult years: In 2025, sales rose 7% to a record $15.9 billion, finally surpassing its 2019 high-water mark. Profits before income and taxes were at their highest in more than a decade.
Just a few years ago, Nordstrom was struggling to get its footing back after COVID. Its Rack chain proved unable to compete well with other discounters including T.J. Maxx and Marshalls. The hard times squeezed Nordstrom and led to it compromise on some of high-end standards that had made the 125-year-old company such a beloved institution.
The American department store is by no means out of the woods—but recent agita in the sector could play out to Nordstrom’s advantage. The bankruptcy filing by Saks Global, which owns Saks Fifth Avenue, Bergdorf Goodman and Neiman Marcus, has shaken the U.S. luxury market to its core—but Nordstrom stands to win market share among well-heeled department store shoppers if its strategy proves to be the correct one.
“There is this huge opportunity in the market,” says consulting firm SW Retail Advisors president Stacey Widlitz. “There is also this opportunity for brands to partner with a retailer that is intact and doing the right thing when so much of the market is really incredibly unstable.”
Risky bets and activist crosshairs
Nordstrom was founded in 1901, when Swedish immigrant John W. Nordstrom and a business partner opened a shoe store in downtown Seattle after they struck gold in the Klondike. The company built a reputation for quality goods and customer service early on. During World War II, when leather was rationed, Nordstrom paid vendors upfront, rather than on credit as was the norm—a philosophy that still gives the company an edge.
By the 1960s, Nordstrom had moved beyond shoes and into fashion; and by the late 1980s it had expanded its footprint from its Pacific Northwest and California roots to the East Coast. Nordstrom established itself as a well-appointed department store chain for the upper middle class with peerless customer service—and it thrived that way for years, eventually listing shares on the New York Stock Exchange in 1971 with the Nordstrom family remaining in charge of company.
But it hit a rough patch a decade ago: Under pressure to grow from Wall Street at a time when all department stores were facing pressure from e-commerce and discount chains, the company plotted an ill-fated Canadian expansion and it vastly expanded its “off-price” Rack chain before it really figured out how to compete with T.J. Maxx. Adding to the financial pressure, Nordstrom spent years and several hundreds of millions of dollars (the company won’t say exactly how much) opening a flagship in New York City in 2019, only for COVID to stop its momentum mere months after opening.
The pandemic felled other retailers on weaker financial footing—among them Lord & Taylor—and Nordstrom made it through, bruised and battered. But leaner times meant less staffing in stores and the resulting clutter and uneven customer service eroded Nordstrom’s luxe cachet.
Post-pandemic, stores got cluttered and the chain let some of its famed customer service standards slip. “We’ve done some soul searching on that. The pandemic in some ways threw us off our game,” says Alexis DePree, Nordstrom’s operations chief.
Wall Street was a punishing taskmaster, and as Nordstrom missed targets, it had little leeway to make deep investments to renew itself. The threat of activist investors loomed, along with the risk that the family could lose control of the company. The Nordstroms tried first in 2017 to take the company off the stock market but failed before ultimately succeeding in 2025. In its $6.25 billion deal, the Nordstroms teamed up with Mexico’s El Puerto de Liverpool department store, an operator of multiple chains. The Nordstrom family now owns a majority 50.1% stake.
Freed from Wall Street’s gaze, Nordstrom no longer has to worry about investor sentiment before shelling out for store improvements, better computer systems for more personalized marketing, or more precise inventory management.
Going private has, in short, has allowed the Nordstroms to fully concentrate on the aspects of its business that made their company a leading retailer for decades.
“We don’t want to be known as the generation of Nordstroms that screwed it up,” says Pete Nordstrom of himself and his brother, along with cousin Jamie, another great-grandson of the founder, who oversees stores.
Inventory, experience, and inspiration
When asked why the U.S. consumer needs Nordstrom, Erik is quick to say that he or she doesn’t. “I don’t think we’re entitled to any business,” he says. “There are lots of choices, and it’s very easy for customers to go elsewhere. Some healthy paranoia serves us well.”
To be successful, Nordstrom must earn its business by standing out and giving shoppers a reason to go to one store over another.
“They’ve had a wake-up call, and are evolving and going after experience,” says Widlitz, the retail analyst. “Shoppers don’t need to come into a department store to fulfill their needs. So successful ones are leaning into ‘how do we get them in and keep them? And that is through excitement, experience and great service.”
The Nordstroms know this. Stores that sell what people want but do not need have to be fun to visit, which explains why the New York flagship has multiple bars, and restaurants. “We spent a fair amount of time going to all the best stores around the world,” Pete explained, name-checking Selfridges in London and Galeries Lafayette and Bon Marché in Paris. “They’ve got a lot of food. It gives people a chance to dwell and hang around—and people like drinking.”
Focusing on food and drink is hardly a radical new strategy, but that’s the point. “It wasn’t about blowing it up and running a bunch of new plays,” says Erik. “It was about building upon the foundation that has been built.”
In the last decade, many top brands like Ralph Lauren, Coach, and Nike—along with newer ones like Vuori—have become sizable retailers themselves, opening more stores of their own. But they know that direct-to-consumer sales won’t replace stores that can offer brands and products priceless exposure.
Nordstrom had 32 million customers last year, an audience that would take eons and tons of money for newer brands to build themselves. What’s more, most consumers don’t wear the same brand head to toe, so multi-brand stores, as department stores prefer to be called nowadays, still have a role to play in the retail world.
Perhaps more crucially, Nordstrom is strong financially and pays its bills, unlike some of its competitors in recent years. (At the time of the bankruptcy filing, Saks Global owed Chanel, about $136 million and Kering, which owns Gucci and Bottega Veneta, $60 million. (On March 6, Saks Global announced it was closing another 12 Saks Fifth Avenue and three Neiman stores but also that it had the liquidity to fund new orders from vendors.)
Another way the Saks Global meltdown has been helpful to Nordstrom: talent. Last year, Nordstrom hired Catherine Bloom, the top-selling individual shopper at Neiman Marcus, with a huge clientele of high net worth individuals, to serve as its new Director of Luxury Styling. Nordstrom last year also hired former former Bergdorf Goodman chief merchant Yumi Shin, leading to a Saks Global lawsuit to block the move.
This past holiday season made clear that Nordstrom is back playing offense again. During a private party for loyal customers in early December, there was a line around the mammoth block at its Manhattan store. The bars in that store and others nearby were teeming and the decorations plentiful, as was the merchandise available for sale.
“The way we just played the holiday season shows what our investment in in-store experience needs to be when customers are out in stores looking to be inspired,” says DePree. Nordstrom ordered a high level of inventory to keep the shelves robustly stocked—a move that a publicly traded Nordstrom might not have been able to convince Wall Street was wise.
The feedback, so far has been good, with analysts and shoppers agreeing that the Nordstroms have figured out how to make the stores a fun destination again, as they were during the golden era of American department stores.
“I don’t think the department store model in and of itself is something that can’t work. It needs to evolve. There needs to be a modern vision of it,” says Pete Nordstrom. “That’s the opportunity for us.”
This story was originally featured on Fortune.com