J. C. Penney comparable department store sales increased 6.1% for the four weeks ending February 26, 2005, on top of a 12.1% increase in last year’s February period. Sales of spring apparel and seasonal products exceeded expectations with good customer response to Valentine’s and Presidents Day events. Catalog/Internet sales increased 6.4% on top of an 8.0% increase last year. The Internet component of sales continues to experience strong growth, increasing nearly 35 percent for the month.

For the month of March, the company expects comparable department stores to be up low-to-mid single digits and catalog/Internet sales to be flat to up slightly. Sales expectations reflect the shift of Easter into this year’s March period. In last year’s March period, comparable department store sales increased 11.4 percent and catalog/Internet sales increased 9.7 percent.

On March 1, 2005, the put option on the company’s $400 million 7.4% Debentures due 2037 expired, and as expected, virtually all of the debentures were extended. As a result, approximately $400 million previously targeted for the exercise of the put option is expected to be reallocated to other capital structure repositioning actions. The majority of the $400 million targeted for the put option exercise is expected to be used for open-market repurchases of debt, with the balance allocated to common stock repurchases.

As noted in the fourth quarter earnings release, the company’s Board of Directors is considering a new common stock repurchase program in 2005 of at least $600 million. The final size of the program will take into consideration additional common stock repurchases resulting from the extension of the debentures.


                       Preliminary Sales Summary
                            ($ in millions)

                                   Period ended         % Increase
                                ------------------- ------------------
                                Feb. 26,  Feb. 28,   All    Comparable
                                  2005      2004    Stores    Stores
                                --------- --------- ------- ----------

4 Weeks
Department stores                 $1,078    $1,011     6.6        6.1
Catalog/Internet                     200       188     6.4
                                --------- ---------
Total Company                     $1,278    $1,199     6.6