(FORTUNE Magazine) – Lexi Luther is having a great day shopping at the Frisco mall outside Dallas with her friend Amanda Holmes. Luther is trolling for makeup, but her only purchases so far have been at J.C. Penney. "I bought some really cute shoes from Penney. They're just like yours," says Luther, pointing to my $200 Manolo Blahniks. "They were only $13."

After helping Penney skirt bankruptcy five years ago, former CEO Allen Questrom led the company through a difficult restructuring. Now Penney, based in Plano, Texas, is trying to rebuild its fortunes by rebuilding its image, one brand at a time. "If the customer can't explain to you why she goes to your place," says Myron Ullman III, who became CEO last December, "you don't have a loyal customer, you have an opportunist."

Ullman, 58, who is known as Mike, is an interesting choice for this rebranding exercise. After stints at Macy's and DFS, he made his name from 1999 to 2002 as managing director of LVMH, the Paris-based luxury-goods conglomerate (i.e., Celine and Pucci) that sells goods at prices that would shock a Penney shopper. Ullman retired from LVMH in January 2002, in part because of a painful spinal injury that makes walking difficult (he gets around on a Segway). But he was ready to get back to work when J.C. Penney came calling. "I don't get business stress by running something," he says. "The stress is not running something."

In his ten months at the helm, Ullman has already brought some polish to Penney. Second-quarter earnings rose to $131 million, from $1 million the previous year. And the stock price is running more than 42% above its one-year low (though it has skidded of late, along with the rest of retail). Ullman also has developed a new branding strategy. He has allocated 10% of the $1.1 billion marketing budget to Penney's own brands and to softer "image" ads aimed at women, instead of dull ad vehicles such as newspaper inserts. He wants Penney to build a following, not be a place where people shop just for the sales.

To further distance Penney from its matronly roots, Ullman enlisted high-end designer Nicole Miller to create a dressy casual line called Nicole, which was a hit in New York City last spring. And to boost sales of Penney's 35 in-house brands, which account for 40% of sales, Ullman is borrowing an old LVMH trick: He's hiring five brand managers to run its five best labels.

One task is clarification. Right now the Penney brands are muddled. Arizona, for instance, is a jazzy jeans line aimed at teens and young women. But the label also appeared on children's clothes, making teens reject it as, like, you know, uncool. "And we've always struggled to get the shoes and handbags to match the brand," sighs Mike Boylson, chief marketing officer. Penney will never have the cachet of Paris. But Ullman's goal of making Penney a respectable shop for women with style doesn't seem far off. Just ask Lexi Luther.