J. C. Penney Company, Inc. department store sales increased 1.4% for the five weeks ended July 7, 2007. Comparable department store sales decreased 1.5%, in-line with guidance for a low-single digit decline. Last year, comparable department store sales increased 4.3% in the June period. The best performing merchandise categories for the month were children's apparel, women's apparel and family footwear, while categories such as furniture and fine jewelry continued to be soft. Geographically, the best performing areas were the southwest and northwest regions of the country.

Sales performance improved towards the end of the month, reflecting a strong initial response to the Company's Back-To-School merchandise assortments, as well as good clearance activity in seasonal merchandise categories.

Internet sales through jcp.com increased 10% for the month, on top of a 27% increase last year. Total Direct sales decreased 10.9%, in-line with guidance for sales to decline about 10%, and compares to a 6.0% increase last year. Sales in Direct continue to be impacted by softness in higher ticket home categories and the Spring/Summer Big Book.

Management guidance for July continues to be for comparable department store sales to increase low-double digits to mid-teens. For Direct, management guidance is for sales to increase low-single digits. As previously noted, this year's July period, which ends Aug. 4, 2007, benefits from an additional week of Back-to-School sales, due to the fiscal calendar shift resulting from last year's 53rd week. In last year's July period, comparable department store sales increased 4.9% and Direct sales were flat.

Management is reaffirming earnings guidance for the second quarter of 77 cents per share.