JC Penney September Comps Drop 12.4%

J. C. Penney Company, Inc. comparable store sales decreased 12.4% for the five-week period ended Oct. 4, 2008, compared with the company’s guidance for sales to decrease mid- to high-single digits. In last year’s September period, comparable store sales decreased 3.7%. Total company sales in September decreased 10.9% from $1,622 million to $1,446 million.

Myron E. (Mike) Ullman, III, chairman and CEO said, “During the September period, further weakening of the economic climate was accompanied by unprecedented events in the financial markets. As a result, our business was impacted by falling consumer confidence and spending levels, and mall traffic experienced an even greater decline than in previous months.”

“We believe it is prudent to lower expectations for the coming months, but we remain confident in the underlying strength of our business. Our sales patterns indicate that customers appreciate the newness and innovation in our merchandise offerings, as evident in good response to new brands such as Decree, enthusiasm for Sephora in our stores, and the positive reaction we have seen to fall and winter apparel in those regions experiencing cooler temperatures. As we pursue our strategies to deliver a compelling customer experience, we remain committed to tightly controlling inventory levels, and carefully managing our capital and operating expenses. These efforts will position JCPenney to gain market share both during and after this economic downturn,” Ullman continued.

As part of the company’s continuing effort to provide newness in its merchandise assortments, it announced the launch of I “Heart” Ronson, a complete women’s fashion sportswear line designed by Charlotte Ronson to be sold exclusively at JCPenney in spring of 2009.

The company opened 12 new stores on Oct. 3, bringing the total of new and relocated stores in 2008 to 35, consistent with the company’s previously announced Bridge Plan. In addition, over the course of the year J. C. Penney will complete extensive renovations of 21 stores, three store expansions, and refurbishments and upgrades to 90 other stores across the country.

The company continues to maintain $2.1 billion of cash investments available as of the end of the second quarter to fund peak seasonal inventory needs of approximately $1.0 billion. The company’s liquidity position is further supported by a $1.2 billion revolving credit facility.

The following updated guidance takes into consideration operating performance during the first two months of the company’s fiscal third quarter, and the expectation for a continuation of weaker sales trends.

—  October sales: Comparable department store sales are expected to decrease low-double digits.

—  Third quarter sales: Management now expects comparable store sales to decrease low-double digits.

—  Third quarter earnings: Management now expects earnings for the third quarter to be in the range of 50 cents to 60 cents per share, compared to previous guidance of 70 cents to 75 cents per share.

                   Preliminary September Sales Summary
                           ($ in millions)

                                             % Increase/(Decrease)
                         Total Company Sales -------------------------
                          for period ended   Total Sales  Comp Stores
                         ------------------- ------------ ------------
                           Oct. 4,   Oct. 6,
                            2008      2007     2008  2007   2008  2007
                         ----------- ------- ------ ----- ------ -----

5 Weeks                  $     1,446 $ 1,622 (10.9) (2.4) (12.4) (3.7)
------------------------

9 Weeks                  $     2,959 $ 3,185  (7.1) (1.8)  (8.6) (3.0)
------------------------

35 Weeks                 $    11,368 $11,927  (4.7)  1.9   (6.6)  1.4