PLANO, Tex. -- Pointed questions regarding Leslie Fay's alleged use of child labor in Guatemala sweatshops and the maker's new relationship with J.C. Penney Co. brought a controversial end to an otherwise upbeat annual meeting Friday at the retailer's headquarters here.

About 15 protestors from the International Ladies Garment Workers Union marched at the entrances to Penney's corporate campus here, with placards that read, "Boycott Leslie Fay" and, "J.C. Penney: No Sweat Shops."

The demonstration was a reaction to an announcement this month that Penney's would start carrying Leslie Fay dresses and sportswear in 500 doors this fall.

Inside, Penney chairman William R. Howell said 1994 sales were planned up 5 to 7 percent, but could rise as much as 8 percent. The catalog is expected to see sales gains of at least 10 percent in the first half.

Women's, men's and home furnishings are all strong so far, but children's business has leveled off. Fashion jewelry, jeanswear, dresses and career apparel are doing best in the women's division.

During the question period, Tim Wagner, a Lutheran pastor from Harrisburg, Pa., stepped to the microphone and described a four-day visit he said he made last week to four Leslie Fay contractors in Guatemala where he claimed he saw girls aged 12 to 14 who worked 48 hours at a stretch and were sexually abused if they did not meet production quotas.

He asked Howell, "What's your position on that exploitation and how might you use your influence as chairman of J.C. Penney to convince Leslie Fay to do the right thing with their workers?"

Howell said he was not familiar with the conditions Wagner described, adding, "We will look at these issues with Leslie Fay the same as we would with any other supplier. We do not condone, nor do we support or engage in the activities that you described."

[In New York, Donald Ochs, senior vice president of worldwide sourcing and manufacturing for Leslie Fay, refuted all of Wagner's allegations and said no minister had visited any of the firm's contractors in Guatemala last week. He said, "There is no abuse of employees, certainly no sexual abuse, no underage employees or attempts to get people to work excessive hours."][John J. Pomerantz, chairman and chief executive officer of Leslie Fay, said, "We share that factory with some of the biggest apparel makers in the industry. We look at the factory before we do business there, and inspect it periodically. We always try to assure that factories follow the right health and safety violations. The charges being made are just not true."] Later, at a press conference, Penney's officials said Jim Hailey, president of the women's division, planned to telephone Pomerantz to discuss Wagner's allegations.

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