PLANO, Texas - (May 17, 2018) - J. C. Penney Company, Inc. (NYSE: JCP) today announced financial results for its fiscal first quarter ended May 5, 2018.

Marvin R. Ellison, chairman and chief executive officer said, "During the first quarter, we achieved a positive sales comp of 0.2 %, which was impacted in large part by a very late start to Spring where we experienced cooler than normal temperatures in April. Although our overall top line sales results came in below our expectations for the quarter, we were encouraged by the strong positive comp performance throughout February and March, as well as the last two weeks of April, when temperatures began to normalize." 

Ellison continued, "Overall, we believe that our strategies are beginning to take hold, as we are seeing improvement in a number of areas. Apparel categories performed well during seasonable weather periods, and our beauty and home refresh initiatives performed well above our total comp sales performance for the quarter.  The strength in sales performance early in the quarter, our investments in enhancing our apparel categories, continued strength in our beauty and home refresh initiatives and a focus on taking market share from ailing retailers all give us confidence in our annual comp sales guidance of flat to up 2%.  Our teams remain committed to improving our core apparel business and executing on our strategic growth initiatives.  I would like to thank our nearly 100,000 associates around our company for their hard work and commitment to JCPenney."

Starting in the first quarter of fiscal 2018, the Company adopted new accounting standards which relate to revenue recognition and pension accounting.  Accordingly, the Company has changed the current year and prior year presentation in its financial statements to reflect the requirements of the new standards.

For the first quarter ended May 5, 2018, total net sales decreased 4.3 % to $2.58 billion compared to $2.70 billion for the first quarter ended Apr. 29, 2017.  The decline in total net sales was primarily the result of the 141 stores that closed in the second and third quarters of fiscal 2017.  Comparable sales increased 0.2 % for the first quarter.  Credit income, which was previously reflected as a reduction to SG&A, was $87 million for the first quarter this year compared to $83 million in the first quarter last year.

Jewelry, Sephora, Men's and Salon were the Company's top performing divisions and categories during the quarter. Geographically, the Gulf Coast and Southeast were the best performing regions of the country.  

Cost of goods sold, which excludes depreciation and amortization, was $1.71 billion, or 66.3 % of sales, compared to $1.73 billion, or 63.9 % of sales in the same period last year. The increase as a rate of sales was primarily driven by increased online clearance selling and continued growth in the mix of the Company's online business, markdown and pricing actions taken in the quarter to clear slow-moving seasonal inventory and ongoing growth in major appliances.

SG&A expenses for the first quarter were $826 million, or 32.0 % of sales compared to $938 million, or 34.7 % of sales in the first quarter last year.  The improvement to last year was primarily driven by lower controllable costs and marketing spend and a reduction in lease expense associated with the remaining amortization of a gain on the sale of a leasehold interest last year.

For the first quarter, the Company's net loss was $78 million, or ($0.25) per share, compared to a net loss of $187 million, or ($0.60) per share in the same period last year. 

Adjusted net loss was $69 million, or ($0.22) per share, for the first quarter this year compared to adjusted net income of $2 million, or $0.01 per share, for the first quarter last year.  Adjusted net loss/income for the first quarter of 2018 and 2017 included the sale of operating assets, which totaled $17 million, or $0.05 per share, and $117 million, or $0.38 per share, respectively.  In addition, adjusted net loss/income for 2018 and 2017 included the following items: 

• $7 million, or approximately ($0.02) per share, of restructuring and management transition charges in the first quarter this year compared to $100 million, or ($0.32) per share in the first quarter last year; and
• $19 million, or $0.06 per share, benefit this year related to other components of net periodic pension income compared to $106 million expense, or ($0.34) per share, of net periodic pension costs primarily associated with the Company's voluntary early retirement program last year.

A reconciliation of GAAP to non-GAAP financial measures is included in the schedules accompanying the consolidated financial statements in this release.

Inventory at the end of the first quarter was $2.95 billion, a decrease of 1.4 % compared to the end of the first quarter last year, and up 2.6 % on a comp store basis.  Capital expenditures for the first quarter, net of landlord allowances, were $103 million. 

Cash and cash equivalents at the end of the first quarter were $181 million.  During the quarter, the Company utilized available cash on hand to retire $190 million principal amount of outstanding secured notes that matured in February.  The Company also issued $400 million in senior secured second priority notes due 2025, utilizing the net proceeds of the offering to successfully complete its tender offer for $375 million aggregate principal amount of its outstanding 2019 and 2020 bonds. The Company ended the quarter with liquidity of approximately $2 billion. 

Outlook

The Company has revised its 2018 full year guidance, which reflects only the impact of the adoption of new revenue recognition and pension accounting standards, as follows:

• Comparable store sales: expected to remain at 0.0 % to 2.0 %; and
• Adjusted earnings per share¹: now expected to be ($0.07) to $0.13.  

^[1] A reconciliation of non-GAAP forward-looking projections to GAAP financial measures is not available as the nature or amount of potential adjustments, which may be significant, cannot be determined at this time.

First Quarter Earnings Conference Call Details
At 8:30 a.m. ET today, the Company will host a live conference call conducted by Chairman and Chief Executive Officer Marvin R. Ellison and Chief Financial Officer Jeffrey Davis.  Management will discuss the Company's performance during the quarter and take questions from participants.  To access the conference call, please dial (844) 243-9275, or (225) 283-0394 for international callers, and reference 9768329 conference ID or visit the Company's investor relations website at http://ir.jcpenney.com.  Supplemental slides will be available on the Company's investor relations website approximately 10 minutes before the start of the conference call.

Telephone playback will be available for seven days beginning approximately two hours after the conclusion of the conference call by dialing (855) 859-2056, or (404) 537-3406 for international callers, and referencing 9768329 conference ID.

Investors and others should note that we currently announce material information using SEC filings, press releases, public conference calls and webcasts.  In the future, we will continue to use these channels to distribute material information about the Company and may also utilize our website and/or various social media to communicate important information about the Company, key personnel, new brands and services, trends, new marketing campaigns, corporate initiatives and other matters.  Information that we post on our website or on social media channels could be deemed material; therefore, we encourage investors, the media, our customers, business partners and others interested in our Company to review the information we post on our website as well as the social media channels.

About JCPenney:

J. C. Penney Company, Inc. (NYSE: JCP), one of the nation's largest apparel and home retailers, combines an expansive footprint of over 860 stores across the United States and Puerto Rico with a powerful e-commerce site, jcp.com, to deliver style and value for all hard-working American families. At every touchpoint, customers will discover stylish merchandise at incredible value from an extensive portfolio of private, exclusive and national brands. Reinforcing this shopping experience is the customer service and warrior spirit of approximately 98,000 associates across the globe, all driving toward the Company's mission to help customers find what they love for less time, money and effort. 

J. C. PENNEY COMPANY, INC.
SUMMARY OF OPERATING RESULTS
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1. Comparable store sales include sales from all stores, including sales from services, that have been open for 12 consecutive full fiscal months and Internet sales.  Stores closed for an extended period are not included in comparable store sales calculations, while stores remodeled and minor expansions not requiring store closure remain in the calculations.  Certain items, such as sales return estimates and store liquidation sales, are excluded from the Company's calculation. Our definition and calculation of comparable store sales may differ from other companies in the retail industry.

SUMMARY BALANCE SHEETS
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SUMMARY STATEMENTS OF CASH FLOWS
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