Merchandise, store improvements help Value City battle big boys. (Value City Department Stores Inc.)

After a new management team was named at Value City Department Stores Inc. last year, some of the new bosses went from store to store for several months and took inventory.

What they saw, they didn't like.

Though stores were packed with merchandise, too few brand names were on the shelves. Clothing was crammed so tightly on racks that customers had a hard time pulling out items to look at them. Signs overwhelmed the stores.

"They weren't clean," said Martin P. Doolan, president and CEO since July 1997. "There was sign pollution. The merchandising of inventory wasn't good either. You could buy jeans, but they were in six or seven different departments."

What Doolan and COO Mike Tanner saw in those store visits last year were symptoms of what ailed Value City.

A $90 million inventory had slowed the company's growth. Growth in per-share earnings for stockholders, which had climbed to 68 cents in 1996 from 43 cents in 1995, had reversed, dropping to 12 cents per share in 1997.

The retail climate has changed, and so have consumers' shopping patterns. Both are more demanding.

Bob Shook, a Columbus-based author and a Value City outside director, said it used to be that if a deep discount merchandiser bought something cheap, "you could always sell it. You'd make a profit and the customer would be happy, because they got a good value.

"But the competition is so great now that having a good deal isn't enough," said Shook. "People don't have enough time. A customer comes into the store but we don't have his size. He gets mad and he won't come back."

Though the company never lost money, Chairman Jay Schottenstein, grandson of the company's founder, was concerned. He turned to Doolan for …