J. C. Penney Company, Inc. saw overall department store sales increase 5.5% for the month of July, while comparable store sales increased 4.9%, on top of a 1.6% increase in last year’s period. All merchandise divisions had sales gains, with the best divisional performances in family shoes, women’s accessories and men’s apparel. Geographically, all regions had sales gains with the best results in the western and southeastern regions of the country.

Internet sales through jcp.com continue to represent the company’s fastest growing sales channel, increasing approximately 21% in July on top of a 30% increase last year. Direct sales in total were flat for the period, consistent with previous guidance for sales to be flat-to-up slightly. Last year, Direct sales increased 4.0%.


August Sales Guidance

While the company is entering the Back-To-School selling season with positive momentum, it continues to take a cautious approach toward future guidance given macroeconomic conditions. Accordingly, for the four-week August period, management guidance is for both comparable department store and Direct sales to increase slightly. In last year’s August period, comparable department store sales increased 2.8% and Direct sales were flat.


Earnings Outlook

Based on sales and operating performance trends, management now expects second quarter earnings from continuing operations to be approximately 71 cents per share, an increase of 6 cents per share from previous guidance. This guidance reflects continued improvement in operating performance coupled with lower net interest expense. 

                    Preliminary July Sales Summary
                           ($ in millions)

                                                     % Increase
                                               -----------------------
                                Period ended   All Stores  Comp Stores
                               --------------- ----------- -----------
                               Jul 29, Jul 30,
                                 2006    2005  2006  2005  2006  2005
                               ------- ------- ----- ----- ----- -----
4 Weeks
-------------------------------
Department stores              $1,057  $1,002   5.5   2.3   4.9   1.6
Direct                            182     182   0.0   4.0
                               ------- -------
Total Company                  $1,239  $1,184   4.6   2.6

13 Weeks
-------------------------------
Department stores              $3,631  $3,390   7.1   5.1   6.6   4.2
Direct                            607     591   2.7   7.1
                               ------- -------
Total Company                  $4,238  $3,981   6.5   5.4

26 Weeks
-------------------------------
Department stores              $7,166  $6,849   4.6   4.2   3.9   3.5
Direct                          1,292   1,250   3.4   6.2
                               ------- -------
Total Company                  $8,458  $8,099   4.4   4.5