PLANO, Texas - (May 12, 2017) - J. C. Penney Company, Inc. (NYSE: JCP) today announced financial results for its fiscal first quarter ended Apr. 29, 2017.  

Marvin R. Ellison, Chairman and Chief Executive Officer said, "We continue to make encouraging progress in the Company's competitive and financial position despite our top-line performance during the first quarter. While February was a very challenging month for JCPenney and broader retail, we are pleased with our comp store sales for the combined March and April period, which improved significantly versus February.  The recent sales trends, combined with the improvement in women's apparel and our growth initiatives led by Sephora inside JCPenney, jcp.com and major appliances, provide us with the confidence to maintain our sales guidance for the full year.  Additionally, our investment in pricing and merchandising systems allowed us to deliver a 10 basis point increase in gross margin over last year, in light of the growth in appliances and e-commerce.  Also, through our de-leveraging efforts and improved financial condition, we earned yet another credit rating upgrade this quarter.  Our teams remain committed to executing on our strategic growth initiatives, and we are confident in our ability to drive sustainable growth and long-term profitability for JCPenney."

The Company reported net sales of $2.7 billion in the first quarter of 2017 compared to $2.8 billion last year.  Comparable store sales were (3.5) % for the quarter.

Home, Sephora, Fine Jewelry and Salon all comped positively, and were the Company's top performing divisions during the quarter. Geographically, the Southwest and Southeast were the best performing regions of the country.

For the first quarter, gross margin was 36.3 % of sales, an increase of 10 basis points compared to the first quarter last year.  Gross margin was positively impacted by improved selling margins throughout the quarter, which was partially offset by the continued growth in the Company's online and major appliance businesses. 

SG&A expenses for the quarter declined $29 million to $843 million, or 31.2 % of sales.  These savings were primarily driven by lower marketing, store controllable costs and incentive compensation.

For the first quarter, the Company's net loss was $180 million, or ($0.58) per share.  This includes the following items: 

• $220 million, or approximately ($0.71) per share, of restructuring charges associated with our store closing announcement and voluntary early retirement program; 

• $17 million, or approximately $0.06 per share, of benefit from the tax impact from other comprehensive income allocation and other; and 

• $4 million, or approximately $0.01 per share, of benefit from primary pension plans. 

Adjusted net income improved $116 million, or $0.38 per share, to $0.06 per share for the first quarter this year compared to a net loss of $97 million, or ($0.32) per share, last year.  Adjusted net income for the first quarter of 2017 and 2016 includes the sale of operating assets, which totaled $117 million and $8 million, respectively.  A reconciliation of GAAP to non-GAAP financial measures is included in the schedules accompanying the consolidated financial statements in this release. 

EBITDA was $40 million for the first quarter 2017 compared to $176 million for the same period last year.  Adjusted EBITDA for the quarter improved $102 million or 67 % to $255 million compared to the first quarter last year.  

Inventory at the end of the first quarter 2017 was $2.95 billion, an increase of 0.8 % compared to the end of the first quarter last year.  Approximately 300 basis points of the increase was driven by floor samples for appliance showrooms and higher inventory levels to support the Company's continued investment in new Sephora shops.  

The Company completed the sale of its Buena Park distribution facility in March for a net sales price of approximately $131 million and recorded a net gain of approximately $111 million in the first quarter associated with the sale of this facility. 

Cash and cash equivalents at the end of the first quarter were $363 million.  During the quarter, the Company utilized available cash on hand to retire $220 million of outstanding bonds that matured in April.  As previously announced earlier this week, the Company launched cash tender offers to purchase up to $300 million aggregate principal amount on portions of its 2018 and 2019 outstanding bonds.  The Company ended the quarter with a liquidity position of approximately $2.4 billion.  

In March, Standard & Poor's Rating Services upgraded the Company's credit rating one notch to B+ and affirmed their positive outlook on the Company. 

Outlook

The Company reaffirmed its 2017 full year guidance.  As a reminder, fiscal 2017 is a 53-week year which has been incorporated into the full year guidance, with the exception of comparable store sales which are calculated on comparable 52-week basis.  The following guidance also includes the expected impact of the Company's previously announced store closures.  The fiscal 2017 full year guidance is reaffirmed as follows: 

• Comparable store sales: expected to be -1% to +1%;
• Gross margin: expected to be up 20 to 40 basis points versus 2016;
• SG&A dollars: expected to be down 1 to 2% versus 2016;
• Adjusted earnings per share¹: expected to be $0.40 to $0.65.  

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 Ed Record.  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 15893982 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 15893982 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 following social media channels:

About JCPenney:

J. C. Penney Company, Inc. (NYSE:JCP), one of the nation's largest apparel and home furnishings retailers, is on a mission to ensure every customer's shopping experience is worth her time, money and effort. Whether shopping jcp.com or visiting one of over 1,000 store locations across the United States and Puerto Rico, she will discover a broad assortment of products from a leading portfolio of private, exclusive and national brands.  Supporting this value proposition is the warrior spirit of over 100,000 JCPenney associates worldwide, who are focused on the Company's three strategic priorities of strengthening private brands, becoming a world-class omnichannel retailer and increasing revenue per customer. 

J. C. PENNEY COMPANY, INC.
SUMMARY OF OPERATING RESULTS
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1. For the three months ended April 29, 2017 and April 30, 2016, the Company increased its net valuation allowance by $64 million and $13 million, respectively, against certain federal and state net operating loss carry forward assets.
2. Comparable store sales include sales from all stores, including sales from services and commissions earned from our in-store licensed departments, 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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