J.C. Penney shops around $300 million acc't review

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J.C. Penney Co. has contacted agency review consultants as it explores a shift of its $300 million-plus retail account.

The bulk of the business is currently housed at Temerlin McClain, Irving, Texas, which has handled the account since 1991.

DDB Worldwide edged onto Penney's roster last February after its Dallas office nabbed the marketer's $20 million Arizona Jeans business. Also, DDB recently won the retailer's $20 million Home account.


Penney's executives began contacting consultants a month ago regarding a possible review. One executive close to the situation said Penney's executives expressed "general dissatisfaction" with Temerlin.

Temerlin has been scrambling to save the account, according to another executive close to the shop. Over the past few months, the agency shifted account executives and tried new creative executions. A top executive on the Penney's account, Diane Fannin, resigned in late November.

The shop has spent the last several months adjusting to new executives in Penney's marketing department. In June, Stephen Farley was brought in as the retailer's first chief marketing officer. In a November interview with Advertising Age, he said Penney's would evaluate its current agency contracts and compensation.

"Our agencies have a formidable task, and we're asking more of them," he said at the time. "We'll see what happens."

Mr. Farley couldn't be reached last week for comment.

A Penney's loss would be a blow to Temerlin, which counts the retailer as one of its largest clients. Temerlin handles general-market creative as well as some media planning and buying.

Executives at Temerlin couldn't be reached for comment by press time.


Despite the robust economy, Penney's has experienced troubles. The company posted third-quarter net income of $142 million, down from $186 million for the same period in 1998. The nation's fourth-largest retailer had $30 billion in sales in '98; it has struggled with declining sales over the last four years.

Wall Street also hasn't been kind to Penney's. In the middle of the prime holiday-shopping season, on Dec. 22, the company's stock posted a 52-week low of $17.68. On Dec. 29, the stock closed at $19.06.

Candace Corlett, a partner with consultancy WSL Strategic Retail, said Penney's doesn't distinguish itself in the crowded field of retailers.

"I see no evidence of brand identity or image-building campaigns," she said. "Many retailers have been on the branding identity track for at least three to five years, and J.C. Penney hasn't even bought a ticket yet."

Department stores such as Penney's and Sears, Roebuck & Co. have been squeezed by specialty shops on the high end and mass merchandisers such as Wal-Mart Stores on the low end, according to Ms. Corlett and other analysts.

It's unclear if Penney's media buying, currently handled by MediaVest, New York, will be included in the review. Also not yet known is if Penney's Eckerd Drug division, currently handled by Doner, Southfield, Mich., and Mark Russell & Associates, Syracuse, N.Y., would be placed in review.

One agency executive said an Eckerd review is a possibility. Eckerd executives couldn't be reached for comment.

Contributing: Beth Snyder

Copyright January 2000, Crain Communications Inc.

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