J.C. Penney December Comps Fall 1.2%; Holiday Period Comps Climb 3.1%

J. C. Penney Company reported 2004 holiday sales, comprised of the nine-week November and December period, increased by 3.1 percent for comparable Department Stores and 1.9 percent for Catalog/Internet. Internet sales increased over 30 percent and now exceed $745 million for the year.

Sales for both the November and December periods individually, were within management’s guidance for Department Stores and Catalog/Internet, and reflected strong Thanksgiving and after-Christmas performance. As previously noted, the Company’s reporting calendar in 2004 is impacted by a fiscal calendar shift resulting from last year’s 53rd week, in particular, Thanksgiving week sales were reported in November this year and December last year.

Based on the results of the November and December periods, management now believes that fourth quarter earnings are trending toward the high-end of previously communicated guidance. Earnings are now expected to be in the range of $1.00 to $1.05 per share, including the impact of previously disclosed one-time charges of approximately $0.08 per share.

                       Preliminary Sales Summary
                       -------------------------
                           ($ in millions)

                                    Period ended       % Increase/
                                                        (Decrease)
                                  ----------------- ------------------
                                  Jan. 01, Dec. 27,  All    Comparable
                                    2005     2003    Stores   Stores
                                  -------- -------- ------- ----------

5 Weeks
-------
Department stores                  $2,801   $2,839    (1.3)      (1.2)
Catalog/Internet                      400      375     6.7
                                  -------- --------
Total                              $3,201   $3,214    (0.4)

9 Weeks
-------
Department stores                  $4,344   $4,216     3.0        3.1
Catalog/Internet                      684      671     1.9
                                  -------- --------
Total                              $5,028   $4,887     2.9

48 Weeks
--------
Department stores                 $14,828  $14,090     5.2        5.3
Catalog/Internet                    2,551    2,485     2.7
                                  -------- --------
Total                             $17,379  $16,575     4.9

For the month of January, the Company now expects comparable Department Stores to decline low- to mid-single digits and Catalog/Internet to increase mid-single digits. January results continue to reflect the impact of the fiscal calendar shift.

Capital Structure Repositioning Update

As of Jan. 3, 2005, the Company had repurchased 43.4 million shares of its common stock in open market transactions for approximately $1.7 billion. This represents approximately 56 percent of the total planned share repurchase program. The Company continues to expect to complete the share repurchase program by the end of the second quarter of 2005.