J. C. Penney Company, Inc. total department store sales increased 1.1% for the month of October, 2007, while comparable department store sales decreased 1.8% compared to an 8.1% comparable store sales increase in last year’s October period and guidance for a low- to mid-single digit increase.

For the month, the best performing merchandise categories were family shoes and selected home categories, while apparel sales were impacted by unseasonable weather. Sales were softest in men’s apparel and women’s accessories. Geographically, the best performance was is in the northwest region of the country.

Internet sales increased 8.7% for the month, on top of a 26% increase last year. Total Direct sales decreased 3.8% compared with a 2.1% increase last year and guidance for a low-single digit decline.

Sales in the October period reflect a softer consumer spending environment relative to last year as well as the continuation of unseasonable weather patterns in much of the country. Myron E. (Mike) Ullman, III, chairman and chief executive officer of JCPenney said, “Our customers are clearly facing headwinds that are impacting both sentiment and discretionary spending levels, including weak housing market conditions, high energy prices, and uncertainty in the mortgage and credit markets.

“Although we have seen our customers respond to calendar-related, or ‘appointment shopping’ events, we expect the challenging retail environment to continue for the foreseeable future. As a result, we are approaching the fourth quarter and 2008 cautiously to ensure our inventory positioning and expense levels are appropriate in light of current conditions. Over the longer term, we remain confident that the growth initiatives of our long-range plan to improve our merchandise assortments and continue new store growth are the right strategies to ensure our business is well-positioned for sustainable growth when the consumer environment improves.”

Store Opening and Renovation Update

With the opening of six stores on Nov. 2, the Company has completed its plan for the addition of 50 new and relocated stores during 2007, which are included in total department store sales. The Company has also achieved its plan to complete 65 store renovations this year.

Earnings and Sales Outlook

Management continues to expect that third quarter earnings from continuing operations will be in the range of its previously stated guidance of $1.00 to $1.04 per share, before the favorable effect of 14 cents per share in one-time federal and state tax credits that will be recorded in the third quarter.

As noted above, management has modified its sales expectations for the remainder of the year to reflect the continuation of current weakness in the retail and consumer environment. In addition, the calendar shift due to last year’s 53rd week is expected to benefit the November reporting period and negatively impact the December and January periods and is reflected in the following guidance:

  • November: Comparable department store sales are expected to increase low-single digits for the four-week period ending Dec. 1, and Direct sales are expected to increase mid-single digits. Comparable department store sales increased 1.4% in last year’s November period, while Direct sales decreased 0.3%.
  • Fourth quarter: Comparable department store sales are expected to decrease low-single digits for the fourth quarter, and Direct sales are expected to decrease mid-single digits. Comparable department store sales increased 2.2% for last year’s fourth quarter, while Direct sales decreased 1.2%.