Reluctant SAVIOR

Mickey Mouse sits, workmanlike, at a small table in the office of J. C. Penney Co, Inc’s chairman of the board. Papers strewn out in front of him, the 3-foot-high stuffed cartoon hero, dressed in his characteristic red overalls and bright yellow buttoas, is propped up just a few feet away from his office mate, W. R. Howell, the man who has made an indelible mark on J. C. Penney during his 12-year tenure as chairman, leading the company out of New York City and into the plains of North Texas, and guiding it through a remarkable resurgence that has set the entire retailing industry on its ear.

As the famed mouse smiles over his shoulder, How-ell, dressed in a significantly more understated get-up-a $200 gray pinstripe suit he bought in a J. C. Penney store–grimaces as he discusses the actions of J. C. Penney’s main competitor, a similarly resurgent Sears, Roebuck and Co. The images that prime time television viewers see nearly every evening-ballerinas dancing, little girls running through yards, and thin models prancing through Sears stores, all accompanied by the tagline: “Come see the softer side of Scare”-make him twitch like an irritated child. Sears’ transformation has produced what most analysts are call-ingone of the most successful turnarounds in American business history.

And W. R. Howell has heard it all before.

His company has already successfully embarked on a nearly identical campaign to remake itself from within. That restructuring has transformed J. C. Penney stores from a mix of electronics, washers and dryers, and polyester clothing to a high-quality apparel-based chain. Where in 1983 there was an automotive center and an electronics set-up, today there are women’s business suits and a wall lined with wrinkle-free cotton pants. The strategy of eliminating the “hard” items and replacing them with “softer, ” low-priced, high-quality apparel has made J. C. Penney into a hybrid-a mix of Mervyn’s prices and Dillard’s quality. And that, in turn, has sent Mervyn’s, Dillard’s, and others struggling to recapture their niche. Above all, J. C. Penney’s rebirth has made Sears hell-bent on quickly reshaping itself-in J. C. Penney’s image.

Howell, a quiet-spoken, thoughtful man, can’t hide the furrow in his brow when he speaks of Sears’ copycat strategy. “I’m a firm believer, ” he says, pausing as his face grays with determination, lit by the sunlight streaming through the shades in his office at J. C. Penney’s Piano headquarters, “that you can’t live forever trying to copy someone else. “

Howell should know. In his term as chairman he has led J. C. Penney through its most tumultuous period, and in so doing has changed the core of the company’s operations like no other company leader before him. Where W. R. Howell has taken J. C. Penney in the last decade plus, the rest of the retailing industry is now rushing to follow, and that has led Howell to plan for his departure, preferring that younger, fresher executives handle the onslaught of challenges ahead.



IT IS W. R. HOWELl’S INTENTION TO STEP down from his chairman’s post sometime in the next few years. Though Howell, 59, won’t reveal exactly when he expects to leave-saying it’s part of the company’s overall strategy-the betting money has him retiring at his 60th birthday. Until the U. S. Congress declared such practices illegal, J. C. Penney Co. Inc. held to a mandatory retirement for its associates at age 60, a rule dating back to j. C. Penney himself. True to the founder’s wishes, Howell has already begun phasing himself out of the company.

“I’ve always said that I’m a steward of this company for a certain period of time, ” Howell says. “And when that time is over, I have no plans to be hanging around. ” In January 1995, Howell stepped down from the chief executive officer’s post, handing that posit ion to Jim Oesterreicher, who had headed the stores division for the company.

“It’s fortunate for all of us that W. R. has decided to stay a little bit longer, and as far as I’m concerned he can stay as long as he chooses, ” Oesterreicher says. “His impact on the company has been enormous. But his biggest genius of all is not being the sole painter, but being able to assemble large groups of management people who can make decisions and carry on. “

And as competition from Sears and others grows (after all, J. C. Penney still trails Sears by millions of dollars in annual sales), carrying on becomes critical.

“What’s at stake here, ” Howell adds, “is not my career, not Jim [Oesterreicher]’s career. The issue here is sustaining the leadership, sustaining the business. It’s not getting easier. The competitive forces are there. “

Indeed they are. Since J. C. Penney’s revitalization, its competitors have been tweaking their own strategies to compete with the high-quality, low-price strategy that boosted J. C. Penney’s sales. That’s because J. C. Penney’s revitalization has been pervasive. MR, the magazine of menswear retailing, named J. C. Penney 1995 Retailer of the Year, stating that “while many in the retail community weren’t looking, this giant general merchant transformed itself into a profitable and exciting department store. ” A similar 1994 plaudit came from Women’s Wear Daily, where a reader survey rated J. C. Penney stores the best for women’s apparel.

If it wasn’t before 1983, J. C. Penney is now a part of your life. Something you own comes from there. Someone you know shops there regularly. The numbers can’t be ignored. J. C. Penney’s own private label, Worthington, is the third largest selling career-wear clothes line in the nation. The company sells more women’s skirts, slacks, sweaters, blouses, blazers, and hosiery than anyone else. Forget Victoria’s Secret: J. C. Penney is the top seller of intimate apparel. The company is also the top retail outlet for Dallas Cowboys merchandise, the biggest-selling sports apparel in the nation. And about one-third of all American families have purchased something from one of J. C. Penney’s catalogs in the last two and a half years.

That kind of influence hasn’t gone unnoticed by the rest of the retailing industry. Everyone in retail is either trying to catch up with J. C. Penney or niche itself differently. When Little Rock, Arkansas-based Dillard’s Department Stores hit rocky financial shores early last year, the company announced it would not resort to frequent blow-out sales, holding instead to its age-old everyday low-pricing policy. That has set it apart from J. C. Penney and others, to be sure, but it has also sent Dillard’s sales and profits falling. Meanwhile Mervyn’s is revamping everything it does, from pricing to restocking its merchandise. Those efforts come because of wickedly slumping sales-and much of that slump can be credited to J. C. Penney. Why, after all, would consumers shop in Mervyn’s when they could get higher-quality merchandise for the same price at J. C. Penney?

Most of all, the revitalization of J. C. Penney has affected Sears, Roebuck and Co., whose two-year-old rebirth strategy bears a striking resemblance to that of J. C. Penney a decade ago. Sears has limited its hard lines-washers and dryers, lawnmowers, et al, and replaced them with softer merchandise. And Sears’ television commercials, much like J. C. Penney’s did, proclaim the changes in the stores.

Sears changed one thing that J. C. Penney did not. Sears’ decision to discontinue its catalog business helped make J. C. Penney the top seller of catalog merchandise in the country, something that the company’s emphasis on state-of-the-art technology, both in its Piano headquarters and in its catalog telephone ordering centers, has made significantly easier. But where J. C. Penney has continued a full line of catalogs, Sears has added narrowly targeted specialty catalogs several times a year, aping the way J. C. Penney has supplemented its “big book” catalog business for years.

Arthur Martinez, chief executive officer of Sears’ merchandise group, who joined the company in September 1992, has openly admitted that his company is copying Howell’s.

“Art Martinez is either a genius or just so naive, ” Howell scoffs. “It’s yet to be determined. He has been living off of telling everybody that they are going to do what J. C. Penney has already done. “

The success of the J. C. Penney team has led other retailers to start fishing for the Piano company’s executives. As J. C. Penney digs in deeply to protect its best minds, says one source, “the sharks are in the waters around here, but so far they haven’t gotten any swimmers. “

Howell remains adamant that J. C. Penney will fight off the sharks and the competitions strategies.

“Are we just going to sit here with our hands tied and let them do this to us? ’” he asks defiantly. “I can assure you that’s not the case at all. Whether our team is successful in staying ahead of the curve as we have been in the last three years, that’s yet to be determined, but that’s the kind of leadership we provide. We can’t live on yesterday’s success. We’ve done a great jobf got a great base under us, and everybody is trying to copy us. It used to be that we were talking about what everybody else was doing. Now they’re talking about what we’re doing, and we’ve got to continually renew ourselves and stay on top. “

Among the strategies to stay on top are J. C. Penney’s increasing international efforts. The company has invested big in Mexico, planning to open seven stores there by 1996. And its private label merchandise is already being sold in stores from Puerto Rico to Sri Lanka.



WHEN 26-YEAR-OLD J AMES CASH PENNEY, THE SON OF a Baptist preacher, opened his first store in 1902 in Kemmerer, Wyoming, he could hardly have envisioned his concept carrying all the way to Abu Dhabi. Beginning in that first dry goods store, called the Golden Rule, and continuing through his retirement in the 1930s, Penney guided a rapid expansion of what he incorporated as the J. C. Penney Co., all the while insisting that his employees, whom he called associates, follow strict moral guidelines and ethical principles-called the Penney Idea-in all day-to-day business operations.

Those bedrock principles remain prevalent in the company today. Throughout J. C. Penney’s $200 million Piano headquarters, which officially opened in 1992, the founder’s influence on the company is plain to see. On the second floor of the sprawling, red-stone complex is a museum dedicated to Penney’s memory that is complete with copies of Penney’s books on business philosophy, as well as film footage of his speeches, and the original counter from the first Golden Rule store. All around the airy building, executives wear pins bannering four letters: H for honor, C for confidence, S for service, and C for cooperation. Those pins are literally the linchpins of Penney’s business philosophy. They are given to associates who have been with the company at least five years. At that time, these “partners” in the firm are eligible for a profit-sharing plan whereby a portion of their annual income is directly related to the performance of the company. It’s a philosophy that dates directly back to Penney’s days when store managers took home one-third of the profits of their stores.

“In this building, it’s hard to forget where this company came from, ” says a junior level executive.

James Cash Penney’s presence is felt most strongly in the center of the building, where he has been immortalized in bronze. Even so, standing 9 feet tall on a 3-foot-high podium, James Cash Penney looks humble. He wears a simple business suit, holds a rumpled hat, and smiles with a half grin, greeting visitors at the grand rotunda that serves as the main entrance to the international headquarters of the $20 billion company he founded.

It was Howell who brought this image of Penney-and for that matter the company itself-here to Piano. While the company’s headquarters was under construction, Howell asked the architects to install the bronze sculpture of Penney in the rotunda, just below the executive suite that circles above, hoping that it would become “the philosophical center” of J. C. Penney.

“I’ve been in here on Saturday mornings, and I’ve seen families in here, and I never interrupt them and introduce myself, but 1 see people and they’re standing there, ” Howell says, his face brightening. “There is this sense of reverence and respect, and for the associates, the ones who come in from the field for training purposes, that is the symbol that there is and was a James Cash Penney. “

Penney’s presence is, if tangible, a bit imposing to some. Managing a company according to the Baptist-based philosophies of a turn-of-the-century frontiersman can be, at times, limiting to the bottom line. “It’s not a place where you find a lot of cutthroat types, ” says a retired company official. “But nobody ever complains about that. ” “All these principles have sustained themselves, ” Howell argues. “They are right. They are viable. They work today. So, let’s operate day-to-day on these principles, this foundation, and let’s challenge everything else. In terms of what color shirts we should have or the myriad decisions in marketing and merchandise we make, those are all up for grabs. What worked last year may not work this year, but all that can be changed within the context of the values and principles that were set down 90 years ago. “



J. C. Penney Co. Inc. has been a part of W. R. Howell’s life for as long as he can remember. From 1935 to 1964, Howell’s father, Bill, managed a small J. C. Penney store in Claremore, Oklahoma, a slice of small-town Americana where life still resembles Mayberry RFD.

“1 grew up in the store, ” Howell says. “Dad could walk to the store. So I heard the things about this company called J. C. Penney as a kid around the breakfast table. “

After store hours, Howell’s parents would often pack him and his sister into the family car and drive them to the store. As they stocked shelves and filled out forms, Howell followed his parents around, watching everything they did, When it got late, Howell and his sister would fall asleep on an old quilt their mother, Opal, would put down in the shoe department, the only carpeted section of the store.

“Miraculously, I’d wake up the next morning and be home in my bed, ” Howell says. “Recently, I’ve kidded in my mom’s presence that to this day 1 don’t know it I was conceived at home or in the store. I mean it was so close, and it was so positive. “

After graduating from high school, Howell, a straight-A student, attended the nearby University of Oklahoma, majoring in marketing and management. He made the dean’s list and married Donna Hatch between his junior and senior years. (The couple, who divorced earlier this year, has two daughters. ) Then, after graduating near the top of his class, Howell set out to find a job, interviewing with numerous companies.

“But an interesting thing happened, ” he recalls. “I never found anybody 1 talked to at those other companies that had the sense of pride and professionalism about their companies that my dad had about the company he worked for all of these years. I basically came back to J. C. Penney because it was more of the environment that I guess my expectations were. “

So he came back to the company that bad always been a part of his life, starting humbly enough at a new J. C. Penney in Tulsa, Oklahoma, where he was a management trainee. He was soon promoted to an old worn-out downtown store in Oklahoma City, where he served as a merchandise manager for eight years. It was there that Howell met James Cash Penney tor the first time. Penney was meeting with the store manager and had asked for Howell to be brought in.

“I came in and sat down and Charles Truitt, the store manager, was there with Mr. Penney, ” Howell recalls, scooting forward to the edge of his chair. “Mr. Penney said to me, ’Mr. Truitt tells me you’re doing a 6ne job here. I just want you to be sure that you understand that this is a very good store manager you have here. I’ve known Charles for a great number of years. And my expectation of you is that you take your own talents and you learn everything you can from Charles and you should be a better person than he is. ’”

Howell jerks backward, “I mean, you talk about a lesson from J. C. Penney, I got it. Your heart is just running a mile a minute when you realize that this is the founder saying this. And, it was a very great challenge to me. “

But not one that Howell took as an indication of great things ahead for him in the company Penney then oversaw from retirement. “My ambitions were to manage a J. C. Penney store, ” Howell says. “1 didn’t even aspire to be a district manager, and when chat came to me I resisted it. I had been managing a store [in Tulsa] for only 11 months, and we’d turned around a store that had sales losses and made it into one with sales gains, 1 menu, isn’t that what the world is all about?”

Even now, after 11 years as chief executive and 12 years as chairman, the store manager Howell a lways wanted to he still comes out when he visits the company’s stores. Though his salary is nearly $2 million a year, Howell wears suits off the rack from J. C. Penney, and he visits local stores regularly as a customer. And he does have a tendency to fuss with stores when he’s in them. “I’ve straightened plenty of shirts through the years, ” he laughs, then sternly adds his constant advice to store managers across the country: “A lot of this business is just fundamentals-the right sizes, the right colors, a broad base of products, presenting them well and having the store be immaculately clean at all hours of the day. “

Despite his love of the stores, Howell decided to accept a district manager’s post, and eventually was sent briefly to the headquarters in New York before heading off to become Western regional manager in California. There, he was again promoted by then-J. C. Penney chairman Don Seihert. Again he accepted-reluctantly.

“Don asked me to come hack to New York, and 1 really said, ’I don’t know, I think you ought to ask somebody who wants to come hack, ’” Howell says. “I’d been in California three years and I was still pretty young and 1 thought I could do a lot more with the region at the time. But I sort of got the same message as I had when I became a district manager-that sometimes the company knows what’s best tor you. “

In the end, Howell’s decision to come hack was not just best for him, but for J. C. Penney as well.



IF THERE’S A BYWORD FOR AMERICAN BUSINESS IN THE LATE ’80s and early ’90s, it’s reengineering-the process by which companies have found their flaws, eliminated them, trimmed workforces by thousands at a time, cut expenses, and boosted profits. That’s when the process works, of course.

Most companies that have reengineered didn’t begin to do so until the latter half of the ’80s, when recession and international competition became impossible to ignore. Fort Worth-based AMR Corp. (American Airlines), for one, didn’t begin its massive restructuring, which has eliminated tens of thousands of jobs and returned the firm to profitability, until the early part of this decade. Dallas’ Texas Instruments Inc., started sooner, in the late 1980s, and its transformation brought profits back to that company in 1991 tor the first time in five yenrs.

For J. C. Penney, the process of reengineering began much earlier-1974, three years after James Cash Penney’s death, and the year Howell returned to New York from his California post. The company’s chairman, Seihert, asked Howell and three other top executives to find a better way for J. C. Penney, which had begun suffering from a significant slump. “We literally found a vacant area of the 1301 Avenue of the Americas building and took a clean sheet of paper and began, ” Howell says.

What they came up with was a long list of deficiencies, chief among them the way the stores were arranged-too much space devoted to heavy goods, such as electronics and automotive services, and too little to softer merchandise such as clothing, historically one of the company’s bread-and-butter lines. By 1983, after Seibert’s retirement, Howell was appointed both chief executive officer and chairman, and the discussion of J. C. Penney’s problems ended. It was now time for action.

The company began that year by eliminating all major appliances, paint and hardware, lawn and garden, automotive and restaurants from its stores-in all, $1 billion worth of annual sales. Then, in 1988, J. C. Penney dropped home electronics, hard sporting goods, and photography-another $500 million in annual sales. In their place came acres of new space for apparel and home furnishings. Along with the eliminations came the store modernization program, an ongoing effort that so far has affected 15 million feet of space in hundreds of stores across the country.

The process of successful change led Business Week to proclaim J. C. Penney one of America’s “nimble giants, ” multibillion dollar firms that adapt quickly to market changes.

“The changes in the stores are apparent every day, ” says an analyst who follows the company. “That led to a change in the bottom line, although it took a long time for it to show up significantly. You didn’t get a real tangible difference in the financial outcome from the change that started in the mid-’80s until, really, the early ’90s. “

And as the results trickled in following painful cutbacks, some staffers questioned the changes. Most unpopular of all the decisions Howell made during that tumultuous time was the one that has, in retrospect, had the most profound effect on the state of J. C. Penney Co. Inc. since the founder himself opened the first Golden Rule store-the company’s relocation from New York to Plano.

When J. C. Penney Co. Inc. announced in the spring of 1987 that it would move out of its storied headquarters in New York, the fashion capital of the world, and pursue its new fashion-intensive strategy from… Piano, Texas, New York responded with an uproar. Dozens of letters to the editor, many from anonymous company employees and all criticizing the decision, appeared in The New York Times. City officials pleaded with J. C. Penney to stay. And most employees were skeptical about making the move.

The overwhelmingly negative reaction, much of which was directed personally at Howell, came even from his business associates. The chairman of another public company with headquarters in New York approached Howell at a meeting one day and told him that J. C. Penney’s plan was “unbelievable. “

“And then he said something that was unbelievable to me, ” Howell recalls, a dumbfounded look crossing his face. “He said, ’I would never recommend my company leaving New York, even it it was the best for the company. ’ I just stood there in amazement that the chairman and CEO of a publicly traded company would say that. I mean, that’s the only reason I was doing it, because it was good for the company.”

The move from New York was indeed Howell’s decision from the beginning. In the process of reinventing itself, he felt that J.C. Penney not only needed to change its stores, hut needed to change its core-its headquarters.

“This wasn’t a group decision,” he says. “This was one time that I really understood my responsibility to the company, to the shareholders, and to the associates. ] had a conviction, and I had to he willing to put it on the line. In the later stages, I said to the board, ’I know there is some hesitancy, and some concern about this, and I understand that. Just to show you how convinced 1 am that these things will be realized-the savings, the improved productivity-then it this thing does not work out, you can fire me. At least the whole world will know why I got fired.’”

Firing Howell wasn’t exactly out of the question in those days. The life of a chairman and CEO is always tentative, especially in the midst of a rebuilding campaign. And back in the spring of 1987, while the company was struggling through a difficult and expensive program to remake itself, J.C. Penney, like all other retailers, was also suffering sluggish sales from a recessionary economy. And amid it all, the company made a controversial stand on the state of New York City, declaring the city, in essence, incapable of handling its future, Things got worse before the company got out.

Howell was reluctant to believe the numbers J.C. Penney’s personnel department was projecting-that just under 50 percent of the company’s 3,400-member headquarters work force would make the move from New York to North Texas. Howell told the board that he felt that number would be around 60 percent. He was wrong, and when it became clear that more than half of his top management team was slipping away, Howell made a last-ditch effort, a personal letter-writing campaign, to sway their decisions.

It turned out to be one of the most disappointing moments of Howell’s career.

“I didn’t want the letter to say ’Dear Associates,’ or ’Dear Friends,’ I wanted it to say, ’Dear Joe, there’s still an opportunity to reconsider.’ And so we sent six to seven hundred of them and the New York papers picked that up as ’Chairman is desperate, losing a lot of people.’ But I just believed there was every reason for them to make that move. But there was no turning back, and at that time J had no idea that we would receive something like 32,000 unsolicited applications from people all over the country looking for work. For somebody sitting out in Redding, California, or someplace, who wanted a job, they were more than willing to come to Texas.

“That was not any sacrifice,” he adds, almost angrily, “that was a job.”

In the end, J.C. Penney hired hundreds of new staffers for its headquarters’ work force and promoted scores more internally, creating a revitalized central team. That J.C. Penney profited from the move is indisputable. Being in the center of the country, executives have easier access to stores across the nation. The company is also well positioned for expansion into Mexico. Store managers on the West Coast benefit from the headquarters central time zone location, because they can actually get someone on the phone at 4 p.m.

“Everyone kept saying that there’s no community down there, no professionals. It was like they had blinders on,” Howell recalls, his frustration every bit as evident as it was eight years before. “And of course we found just the opposite. But my satisfaction had to be private because no one wants somebody to stand up and say, ’I told you so.’

“But I’ll tell you, now that it’s eight years old …” he pauses, fighting the temptation to say “I told you so.” “The only thing I ever said in moments of weakness is that I just wished somebody would have had the courage to do this 20 years ago.”



AND NOW THAT W.R. HOWELL HAS led J.C. Penney to the unlikely promised land of Piano, Texas, it is time for him to leave. Howell says that if the company is to ride its recent wave of success into the next millennium, he must go. And Howell isn’t just holding to a distant business principle of James Cash Penney when he says he plans to retire (or, as he puts it, “graduate”) soon. He’s following his own philosophy, the one that lead him to redefine what a J.C. Penney store was, and the one that made him take this company out of New York. That philosophy: Guarantee success by renewing the company from within.

“As a chairman and CEO, you are either very successful, or not satisfactory. I think you could characterize the last 12 years as having some degree of success achieved during that time,” Howell says. “There is a tendency to want to hang on to that success, but the truth of the matter is that the management team is the strongest we’ve ever had here-second to none in the industry-and that reenergized commitment can be risked if everyone thinks that W.R. is going to stay atound here forever and basically clog up the pipeline.

Ultimately, Howell concludes, “Change is the issue. What worked six months ago from a marketing point of view, from a fashion point of view, may in fact not work at all today, and there’s no reason to try and defend past successes for your difficulties today.

“That’s the real reward over the last 10 years-to sustain this momentum. There are temptations to jerk from one strategy to another, and though every year has not been the best year of our lives, fortunately the last three have been record years, and that’s sort of the proof in the pudding.”

Goodbye, Toasters. Hello, Wonderbras!



It’s OBVIOUS IN EVERY AISLE. WOOD FLOORS AND SOFT white lights adorn current J.C. Penney stores, making them vastly different from their predecessors of just a decade ago. There are no longer auto shops, tool sets, and refrigerators, Instead, there are Dockers, Polos, and cosmetics displays.

The change was a long process that cost millions of dollars and thousands of jobs. In the end it has transformed J.C. Penney Co. Inc. from a Sears wannabe to the Company Sears wants to be.

“We realised in the early ’80s that there was something very inconsistent about selling dresses and tires, chainsaws and diamond rings in the same space,” says Jim Oesterreicher, J.C. Penney’s chief executive officer, who, as president of stores, presided over the company’s revamping. “As we really did customer research to find why they shopped at J.C. Penney, it became very obvious which way we needed to go. It took a lot of courage to change that much footage in the stores.”

A lot of courage and a lot of footage as well. In all, the nation’s fourth largest retailer refurbished more than 15 million square feet of space. It’s a telling reconstruction that had as much to do with America’s shopping habits as anything. J.C. Penney’s in-house economists’ numbers show that 70 percent of all women’s and men’s apparel is purchased in regional malls. But just 40 percent of the refrigerators, toasters, and televisions sold through retail outlets in the country are purchased at major malls along with just 20 percent of hardware.

Since J.C. Penney’s store base was mainly in malls, the company by the mid-’80s decided it would change its stores to reflect changing shopping habits.

A program estimated at well over 52 billion was launched in 1983, a store modernisation that saw all major appliances eliminated from J.C. Penney stores. Paint and hardware, lawn and garden, automotive and restaurants were all eliminated-a $1 billion chunk of the company’s annual sales at the time. Home electronics, sporting goods, and photography equipment followed- worth another $500 million annually.

The sales results proved the strategy out. In 1981, home lines- bath towels, toasters, et cetera-accounted for 37 percent of the annual sales totals at a J.C. Penney store. By 1994, that figure had fallen to 16 percent and women’s apparel, furnishings, and accessories had increased to 40 percent. That, in turn, led to a huge boost in the company’s revenues and earnings.

Sales have increased from 13.4 billion in 1985 to 18.9 billion in 1994- Net income made a bigger percentage jump, up from $435 million in 1985 to $944 million in 1994. The company’s stock has responded. It ended 1985 at $ 11.59 per share, and closed 1994 at $52.63.

Much of the improved sales numbers are attributable to the company’s private brand merchandise programs. J.C Penney manufactures its own lines of women’s, men’s and children’s clothes. The names-Stafford, Hunt Club, and Worthington-are becoming as familiar as Ralph Lauren. And in the fall of 1994, when J.C. Penney led the industry in denim-wear sales, the company’s own Original Arizona Jean Co. brand outsold Levi Strauss’ products.

Those in-house program will continue, enhanced by a continual upgrading of Penney’s stores.

“The consumer doesn’t stay the same, so we can’t,” concludes Oesterreicher. “We’ve changed four times strategically in our history and we won’t stay doing the same thing in the next five or 10 years. The customer will lead us to the next level.”-J.G.