Coldwater Creek is a child of the 1980s. Clad in bright colors, it has been shaped by a booming 1990s economy, the Internet, a wave of aging baby boomers and a recession that put the brakes on nearly 30 years of growth.

Dennis Pence and his then-wife, Ann, started the company as a mail-order business in their Sandpoint apartment.

“We rented a U-Haul and moved from Manhattan 25 years ago with $40,000 and a belief that we were tired — sick and tired — of having bosses tell us what to do, and we wanted to do our own thing,” Dennis Pence said in a 2010 call with investors.

In the early days, the couple took orders from a single telephone, 24/7. Pence says they ended their first year with $17,000 in sales and $40,000 in losses.

To save money on delivery-pickup fees, Pence rode his bike to town every day to drop off orders, he told BusinessWeek in 2005.

But after they took out a bank loan, pawned all their possessions and started mailing catalogs, the Pences’ company caught on. Business doubled or tripled almost every year through the late 1990s, when Coldwater Creek went public.

The retailer took to shopping malls, opening hundreds of stores where its target customers — educated women ages 45 to 65 with an average household income of $100,000 or more — could see, touch and try on items.

But the late 2000s and the early years of this decade have not been kind to Coldwater Creek. The company suffered more than two years of sales declines and losses — a string of hits so severe that its shares rose by almost one-fifth when a third-quarter 2012 loss of $20.5 million beat the $29 million loss a year before. Its stock price tumbled from 2006 highs of more than $100 a share to less than $20 a share in 2008.

Pence stopped taking a salary as he tried to get the company back on track. He shook up the management team and brought in new executives to revamp Coldwater Creek’s marketing, merchandise and management. Coldwater Creek launched its first television campaign and crafted a plan to close up to 45 stores. (It ended fall 2012 with 354 stores, 38 outlets and nine day spas, halfway through its closure plan.)

By 2012, the makeover was starting to pay off — a December 2011 YouTube video on “new ways to tie a scarf” got nearly a half-million views — but hadn’t reversed the losses. A string of weak quarters drove Coldwater Creek’s stock to less than $2 a share in 2012.

Then Pence capped the year with an unexpected announcement: He would step down.

His departure as CEO came with a less-dismal quarterly earnings report — including the first year-over-year gain in net sales in two years.

“We are on the path to returning our business to profitability and growth over time,” he said in November.

With confidence in Coldwater Creek’s trajectory, he said someone new — Jill Brown Dean, president and chief merchandising officer — would take his seat.

Dean spent decades in fashion retail in various leadership roles for Limited Too, Victoria’s Secret and Lane Bryant before being promoted effective Jan. 1. She says her experience at Lane Bryant, which sells larger sizes, gives her insight into figure-flattering needs of the 50-plus woman.

“I’m also in the target demographic myself these days,” says Dean, who is 55.

Jim Bell, who heads operations and finances, is helping Dean guide the company.

“Our heads are down. We have a long way to go,” Bell told Business Insider. But, he says, “We’re happy with the progression of our strategies.”

And though Coldwater Creek’s revival hinges in part on its New York-based team of designers, the company still gets inspiration from Idaho. “The turnaround of our business and brand is very much about our legacy and heritage and being inspired by [northern Idaho’s] beauty,” Dean says.

Coldwater Creek employs 7,000 people, including about 500 at its Sandpoint headquarters.

WHAT WENT WRONG

The company’s plummet is partly the fault of a floundering economy. It’s also partly the fault of a misguided attempt to broaden Coldwater Creek’s appeal, Pence told investors in the 2010 conference call.

“This is a stagnant brand right now,” he said. “And you have as investors seen that and responded appropriately... .”

The recession was a meat grinder for many fashion retail chains. Talbots, a chain similar to Coldwater Creek, shuttered dozens of stores and reported paltry earnings before a private-equity firm bought it for a reported $391 million last year.

But other competitors are faring better.

Chico’s FAS, which owns several brands, has shed roughly half its share value since 2006. But the company reported modest gains and did a buyout of its own — acquiring online retailer Boston Proper — after its stock price hit bottom in 2008. Chico’s reported a 57 percent rise in net income for its latest quarter.

Similarly, Ann Taylor’s stock value has recovered, and the company reported double-digit net-income growth in the third quarter.

Coldwater Creek’s problem was that it lost its focus when the recession struck. Pence spelled out the company’s errors in that 2010 call: The company took to selling T-shirts and jeans to bring in more, and younger, shoppers instead of sticking to its elegant and higher-priced core, like specialty jackets and tunics. That pitted Coldwater Creek against every other major chain in the country, he said.

“That was not appealing to our consumer, and that is not why she needs us in her closet,” he said. “And although she is a loyal customer and she did buy those T-shirts,” the shift wasn’t good for average sales.

Coldwater was lowering prices, but it turned out shoppers didn’t care that a shirt was $10 or $20 cheaper than a competitor’s, he said.

So the company started running experiments with blue-jean prices at its stores around the U.S. The company pinpointed the amount it could mark up jeans for the holiday season. It ran the same tests with jackets, then no-iron shirts.

“In every case, we saw we did not respect our own product, and we were leaving money on the table in a recession,” Pence said in 2010.

WHAT’S GOING RIGHT

The company’s spring line may be an indication of where it’s heading, and why some stock analysts see it as an investment worth making right now.

The spring line is not blue jeans and T-shirts for department-store prices, but kelly green cotton ankle-length pants and navy polka-dot jeans for $70, and cardigans and jackets with striking colors or patterns for $100 or $130.

But the company is still trying to reach the bargain-shopper contingent. It still runs outlet stores and creates a special inventory for an online “factory” with prices 50 percent lower than store-sold versions.

About a year ago, Coldwater Creek also finally joined an army of retailers with rewards programs.

“That endeavor has not only gained us new customers,” Dean says. “Those customers who were shopping Coldwater Creek before have increased shopping frequency two-fold.”

The new management team is refreshing the racks more often, to give customers a reason to come back.

New clothes and accessories had been delivered every three to seven or eight weeks. Now, each store gets fresh shipments every two to three weeks, she says.

The company is closing its underperforming stores and has invested in online sales, which now drive 94 percent of its nonstore business. The catalog is now “a very important advertising vehicle,” Dean says.

But if Pence’s expectations are right, marketing and streamlined stores alone won’t give Coldwater Creek a second life.

Pence told investors three years ago that getting Coldwater Creek back on track meant going back to its roots, “a quality of nature-related sophistication.”

That’s happening, Dean says. Comparable retail store sales in the latest quarter were up more than 7 percent.

“It really starts with the product,” she says. “We’ve returned to our legacy of highly differentiated ... rich color [and] designing our own prints and products in house.”

Even before the relatively better 2012 third quarter, analysts in the financial press were starting to call a possible turnaround.

Piper Jaffray upgraded the stock to “overweight” in October, citing the company’s move to stronger products, promotions and customer loyalty, and the sense that women are buying clothes again, according to American Banking and Market News.

Nasdaq reports that a consensus of analysts agree that Coldwater’s condition is getting better; and two of three stock analysts watching the company give it “strong buy” ratings, with the third suggesting shareholders hang on to Coldwater Creek without buying more.

Audrey Dutton: 377-6448