J.C. Penney Chief to Retire by Year’s End

J.C. Penney Co. said its chief executive and chairman will step down by the end of the year, leaving the giant retailer as it struggles to regain its footing in an increasingly competitive marketplace.

James E. Oesterreicher, 58, who joined the company in 1964 as a management trainee, plans to retire as soon as his successor is in place, which is expected by year end, Penney said.

“Penney has drifted sideways and down for too many years,” said Jeffrey Edelman, a retail analyst for PaineWebber. “Changes have been made too slowly. This could be a major turning point.”

Investors cheered the news, sending Penney’s shares up $1.56 to close at $17.44 on the New York Stock Exchange.

Since he took over as chairman and chief executive in 1997, Oesterreicher has moved aggressively to get the ailing retailer back on track. He closed underperforming stores, sold noncore businesses, overhauled merchandise buying and hired more outside executives.

But analysts believe the company was too slow to adapt to changes in consumer tastes. It continues to lose shoppers to trendier rivals such as Old Navy, Kohl’s and Macy’s.

The company’s sales and earnings have been under pressure and its stock has been battered, losing about two-thirds of its value in the last year.

Penney spokeswoman Rita Trevino Flynn said the board expects to name a replacement by the end of 2000.

Possible successors include Vanessa Castagna, 49, who Penney hired last year as chief operating officer from Wal-Mart Stores Inc.

“There’s a need for new blood and more dynamic leadership in the company. Castagna brought new blood,” said Walter Loeb, who runs the retail consulting firm Loeb Associates, calling Castagna the strongest early candidate.