This year, the Penney plans to spend $700 million to help achieve that goal, Ullman says. It will invest $270 million in new stores, $200 million in existing stores, $170 million technology and $60 million inother strategic areas.

Ullman hopes to capitalize on the positive momentum that J.C. Penney achieved in 2004. Last year was a "break out" year, according to Ullman. Comparable department store sales increased 5%, while sales per sf jumped to $150, an increase of 17% since2000. And, the retailer significantly improved its operations performance, increasing its gross margin150 bps and growing its operating profit 270 basispoints to 7.1% of sales.

Looking forward, Ullman forecasts comparabledepartment store sales increases in the low-singledigits per year and department store square footagegrowth of about 1% per year, which translates into 20to 25 new stores per year. In particular, J.C. Penneyhas outlined a two-pronged real estate approach thatincludes both mall and off-mall locations. "We willcontinue to be a mall-based retailer," Ullman says.However, he points out that the off-mall store modelextends the retailers presence without dependence onnew mall development.