J. C. Penney Co., Inc. reported comparable department store sales
decreased 4.6% and total direct sales decreased 8.5%, below
management's most recent guidance for a low-single digit sales increase
for both. The Plano, TX, company now expects earnings for the third
quarter to be in the range of $1.00 to $1.04 per share, compared
to the previous guidance of $1.28 per share.

Total department store sales decreased 1.2% for the five weeks ended
Oct. 6. Internet sales through www.jcp.com increased 6.4% for the
month, on top of a 36% increase last year.

In last year's September period, comparable department store and Direct
sales increased 8.7% and 11.8%, respectively, representing one of the
most difficult comparisons of the year.

Myron E. (Mike) Ullman, III, chairman and chief executive officer of
JCPenney said, “JCPenney continues to execute its long-range plan
initiatives to accelerate growth and achieve a position of leadership
in the retail industry. While unseasonable weather in large areas of
the country and the well-chronicled issues affecting the housing market
impacted our sales for the September period, we are encouraged by the
favorable response to our fall merchandise assortments in areas
experiencing normal temperatures and the ongoing strength of key
categories, such as fine jewelry.

“Based on our success during the recent Back-to-School season, we
believe customers will continue to respond well to calendar-related or
'appointment shopping' events. For the upcoming holidays, we believe
that we are well-positioned with our merchandise and promotional events
to reinforce for our customers why we should be their preferred
shopping choice.”

For the month, the best performing merchandise categories were in fine
jewelry and women's apparel and accessories, with continued strength in
juniors, dresses, and intimate apparel, while sales were softest in the
home and children's divisions. Geographically, the best performing
areas of the country were the southwest and northwest. Direct sales,
which are heavily weighted toward home merchandise categories, also
reflected weakness in the catalog business.

As part of its real estate growth strategy, the Company opened 22 new
stores on Oct. 5, bringing total new store openings in 2007 to 44. With
six more stores slated to open in the next few weeks, JCPenney will
meet its goal of opening 50 new and relocated stores in 2007.

Sales and Earnings Outlook

The Plano, TX company provided the following expectations:
• October sales: Comparable department store sales
are expected to increase low- to mid-single digits, and reflect a
major promotional event in the first week of November that will
be included in this year's October reporting period. Direct
sales are expected to decrease low-single digits.
• Third quarter sales: Management
now expects both comparable department store and Direct sales to
decrease low-single digits.
• Third quarter earnings: The
Company now expects earnings for the third quarter to be in the
range of $1.00 to $1.04 per share, compared to the previous
guidance of $1.28 per share that had been included in full year
earnings guidance.
• Fourth quarter: As is its
normal practice, management will address fourth quarter earnings
guidance when it reports third quarter earnings on Thursday,
Nov.15.