HOWELL TO STEP DOWN AS J.C. PENNEY'S CEO, WILL STAY AS CHAIRMAN
Byline: Holly HaberWith contributions from Rusty Williamson
DALLAS--W.R. Howell, who presided over J.C. Penney Co.'s trans-formation from a mass merchant to a department store, putting it in the forefront of U.S. retailing, will step down on New Year's Day as chief executive officer. He will be succeeded by James Oesterreicher, president of stores and catalog, the company said Wednesday. Howell will continue as chairman and concentrate on board and strategic issues, including international expansion. In another top-level change, W. Barger Tygart was promoted to president and chief operating officer from senior executive vice president and director of merchandising and support operations. Tygart and Oesterreicher were named to the board of directors. Oesterreicher told WWD, "My top priority is to create an environment where a diverse work force can feel comfortable in exploring new things, testing them and bringing them to market. We all grew up within the company, but we're also risk takers, and without risks you don't move forward." Another priority is to build Penney's presence in the New York metropolitan area, where the chain is eyeing the six stores that Federated Department Stores is expected to sell following its merger with Macy's in December. On Tuesday, at Penney headquarters, Oesterreicher told WWD, "We would certainly like to strengthen our position in the [New York] area. We're not just interested in one store in Manhattan. It's those [other] boroughs that we'd like to examine." He singled out the Abraham & Straus store on 33rd Street, but did not specify any other sites. As part of its acquisition of Macy's, Federated agreed with New York's attorney general to divest six stores: A&S on 33rd Street and in the Sunrise Mall in Massapequa; Macy's in White Plains, N.Y.; Bloomingdale's in Garden City, N.Y.; Stern's in Flushing and Brookhaven Mall, Lake Grove, N.Y. Penney's has two stores in New York City, in Queens and Staten Island, and nine on Long Island. Howell added that Penney's has been in contact with Federated for months regarding its real estate in the New York area. A spokeswoman for Federated would not comment on potential buyers for the stores, but noted, "They won't necessarily be sold as a package." Like many Penney's executives, Oesterreicher has spent his entire career at the chain, joining in 1964 as a management trainee right after finishing college. Through various store management, administrative and strategic planning positions, he worked his way up to president of stores and catalog in 1992. The company said Oesterreicher's appointment is intended to provide a smooth transition upon Howell's anticipated retirement within the next few years, putting the new ceo in the chairman's slot as well. Generally, Penney's executives are encouraged to retire when they hit 60. Howell is 58 and will be 60 in January 1996. Oesterreicher is 53, and Tygart is 59. "Oesterreicher has long been considered the heir apparent," observed N. Richard Nelson Jr., an analyst with Duff & Phelps, Chicago. "He's a real merchant. I think Penney's will continue to be a merchandise-driven organization under his leadership." Howell, who also has spent his entire career at Penney's, is highly regarded for directing Penney's colossal reorganization to a chain that emphasizes apparel and home furnishings for the middle class. He started at the company in 1958 as a trainee in Tulsa, Okla. and held store management positions before becoming a district manager in 1969. He transferred to headquarters to coordinate smaller stores two years later, became a regional vice president in 1976, executive vice president and a director in 1981, vice chairman the next year and chairman and ceo in 1983. A recent WWD survey of 800 shoppers ranked Penney's as America's favorite store. The chain was cited for its selection, quality and competitive prices. Penney's leadership in technology, national advertising and heavy assortment of private labels also helped put it on top, according to the survey. The 1,100-unit chain has become an industry leader in sales and profits. Sales totaled $19 billion in 1993, and profits rose 20.9 percent to $940 million. The robust performance has continued through this year's second quarter ended July 30, when Penney's reported a 6.7 percent same-store sales increase and an 11.4 percent surge in profits. The transformation began in 1983, when the company ditched its home appliances business and started working to make its apparel and home furnishings more appealing. It also began giving a facelift to the stores that made them resemble other department stores, with boutique environments, better fixtures and lighting. In 1988, Penney's stores dropped home electronics, hard sporting goods and photographic equipment to concentrate exclusively on soft goods and home furnishings. The catalog continues to offer those categories. Developing private labels has been critical to the strategy, along with some key brand names. Levi Strauss, for example, does a $1 billion business at Penney's, but other department store chains have been able to limit Penney's access to certain brands. "Howell has done a good job of getting pricing right and product and quality and addressing the needs of the consumer," noted Edward F. Johnson, director of Johnson Redbook Service. "Three to four years ago, they had a decreasing share of market, but now they have an increasing market share and Howell is directly responsible." Howell also was the architect of Penney's relocation to Dallas in 1987. Last year, its 4,000 employees moved into high tech headquarters in Plano, a growing suburb north of Dallas. Besides saving the firm millions of dollars in overhead, it situated the headquarters in the central time zone of its 1,100 stores. "That extra hour makes a lot of difference when talking to Hawaii and Alaska," Oesterreicher pointed out. "It also puts us in the same time zone as part of Mexico and Chile." Aso effective Jan. 1, Gale Duff-Bloom, executive vice president and director of administration, will be senior executive vice president. Duff-Bloom and Tygart will report to Oesterreicher. John T. Cody Jr. was promoted to president of stores from executive vice president and director of stores. Thomas D. Hutchens, executive vice president and director of merchandising, has been elected president of merchandising worldwide. Cody and Hutchens will report to Tygart.
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