J. C. Penney Company, Inc. comparable department store sales increased 7.4% for the five weeks ended July 2, 2005, which was better than previous guidance of a low-single digit increase. In last year's June period, comparable department store sales increased 4.4%. Total department store sales increased 8.1%.

Department store sales were positive across all merchandise divisions, with the strongest performance in women's accessories, women's and men's apparel and family shoes. Men's sportswear and accessories performed well during Father's Day. Geographically, sales were also positive across all regions of the country, with the strongest sales in the northeast.

Direct (catalog/Internet) sales increased 9.1%, ahead of previous guidance for a low- to mid-single digit increase and compared to a 3.4% decline in the same period last year. The Internet component of sales increased approximately 40% for the month on top of a 25% increase in the same period last year.

For the month of July, the company expects comparable department store sales to increase low-single digits compared to an increase of 8.1% in last year's July period. Direct (catalog/Internet) sales are expected to increase low- to mid-single digits compared to a decline of 1.1% last year.

Based on stronger than anticipated sales through June, coupled with improved sell-through of seasonal merchandise, management anticipates second quarter earnings from continuing operations will be in the range of $0.35 to $0.40 per share. This is an increase from the previous second quarter guidance of $0.25 to $0.30 per share. This guidance reflects the impact of previously announced charges associated with open market debt retirements and the expensing of employee stock options, as well as the classification of Renner as a discontinued operation. 

                      Preliminary Sales Summary
                           ($ in millions)

                                 Period ended          % Increase
                             --------------------- -------------------
                              Jul. 02,   Jul. 03,    All    Comparable
                                2005       2004     Stores    Stores
                             ---------- ---------- -------- ----------

5 Weeks
----------------------------
Department stores               $1,321     $1,222      8.1        7.4
Direct (catalog/Internet)          216        198      9.1
                             ---------- ----------
Total Company                   $1,537     $1,420      8.2

9 Weeks
----------------------------
Department stores               $2,388     $2,246      6.3        5.3
Direct (catalog/Internet)          409        377      8.5
                             ---------- ----------
Total Company                   $2,797     $2,623      6.6

22 Weeks
----------------------------
Department stores               $5,847     $5,593      4.5        3.8
Direct (catalog/Internet)        1,068      1,002      6.6
                             ---------- ----------
Total Company                   $6,915     $6,595      4.9