PLANO, Texas - (Feb. 24, 2017) - J. C. Penney Company, Inc. (NYSE: JCP) today announced financial results for its fiscal fourth quarter and full year ended Jan. 28, 2017. Comparable store sales were (0.7) % for the fourth quarter and flat for the full year. On a two-year stack basis, comparable sales grew 3.4 % and 4.5 % for the fourth quarter and full year, respectively.  The Company delivered a $514 million improvement in net income for the full year.

Marvin R. Ellison, chairman and chief executive officer, said, "We are pleased that in the face of a very challenging 2016 retail environment we delivered our first positive net income since 2010.  As recent as 2013, JCPenney reported a net loss of nearly $1.3 billion, or ($5.13) per share, and negative EBITDA of $641 million.  This year, we delivered positive net income and generated EBITDA of over $1 billion.  This is a reflection that the growth initiatives we laid out at our analyst meeting are working.  These initiatives drove significant category growth in the fourth quarter, and provide us a platform to build upon in the years to come.  Although our quarter was negatively impacted by the first three weeks of November, we are pleased that we delivered positive sales comps in the combined December and January period.  We also saw record online performance over the holiday season, and with our continued focus on improved site functionality, expanded and enhanced fulfillment and continued growth in our assortment, we know this will allow us to deliver significant growth in the digital business."

Ellison continued, "This year was not without its challenges, particularly in our women's apparel business, but I am proud this team delivered on our goal to return our company to profitability in 2016.  This is no small feat when considering the situation a few years ago, but our over 100,000 associates embraced our strategy and came to work each day focused on doing their part to drive this incredible turnaround in profitability."

Fourth Quarter Results

JCPenney reported net sales of $4.0 billion in the fourth quarter of 2016 and 2015. Comparable store sales were (0.7) % for the quarter.

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

For the fourth quarter, gross margin was 33.1 % of sales, a 100 basis point decline compared to the same period last year.  Gross margin was impacted primarily by increased promotional activity during the quarter, coupled with the continued growth in both online and major appliances. 

SG&A expenses for the quarter were down $37 million to $925 million, or 23.4 % of sales, representing a 70 basis point improvement from last year. These savings were primarily driven by lower incentive compensation and store controllable costs.

For the fourth quarter, the Company delivered a $323 million improvement in net income over the prior year to $192 million or $0.61 per share.  Adjusted earnings improved $81 million to $0.64 per share for the fourth quarter this year compared to $0.39 per share last year.  Adjusted earnings excludes charges primarily associated with restructuring costs, supplemental retirement plans mark-to-market adjustments and the tax impact resulting from other comprehensive income allocation.

EBITDA improved $288 million to $427 million for the quarter, including the $62 million gain on the home office sale, a 207 % improvement from the same period last year.  Adjusted EBITDA for the quarter improved $68 million or 18 % to $449 million. 

Full Year Results

For the full year 2016, JCPenney reported net sales of $12.5 billion compared to $12.6 billion in 2015, a (0.6) % decrease. Comparable store sales were flat for the year.

For the year, gross margin decreased 30 basis points to 35.7 % from 36.0 % in the prior year.

SG&A expenses for the full year decreased $237 million to $3.5 billion, or 28.2 % of sales, representing a 170 basis point improvement from last year. These savings were primarily driven by lower incentive compensation, store controllable costs, lower corporate overhead and more efficient advertising spend.

For the full year, the Company delivered a $514 million improvement in net income over the prior year to $1 million or $0.00 per share compared to ($1.68) per share last year.   Adjusted earnings per share improved to $0.08 per share for the year compared to ($1.03) per share last year.

EBITDA improved $477 million, including the $62 million gain on the home office sale, to $1.0 billion for the year, a 91 % improvement compared to last year.  Adjusted EBITDA for the year improved $294 million to $1.0 billion, a 41 % improvement versus last year. 

Inventory at year-end was $2.85 billion, an increase of 4.9% compared to last year-end.  Approximately 370 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.  Other basic replenishment inventory accounted for an additional 260 basis points of the increase in inventory.  These increases were partially offset by decreases in fashion and seasonal apparel and other inventory levels.

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

Outlook

The Company's 2017 full year guidance, which includes the expected impact of store closures, is 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.

(Editor's Note:  This morning, JCPenney, Inc. also issued a separate news release announcing plans to optimize retail operations, advance growth and drive profitability)

Fourth Quarter and Full Year 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 66598627 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 66598627 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.

Any updates to the list of social media channels we may use to communicate material information will be posted on the Investor Relations page of the Company's website.

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. For additional information, please visit jcp.com.

Forward-Looking Statements
This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Words such as "expect" and similar expressions identify forward-looking statements, which include, but are not limited to, statements regarding sales, gross margin, selling, general and administrative expenses, earnings and cash flows.  Forward-looking statements are based only on the Company's current assumptions and views of future events and financial performance. They are subject to known and unknown risks and uncertainties, many of which are outside of the Company's control that may cause the Company's actual results to be materially different from planned or expected results. Those risks and uncertainties include, but are not limited to, general economic conditions, including inflation, recession, unemployment levels, consumer confidence and spending patterns, credit availability and debt levels, changes in store traffic trends, the cost of goods, more stringent or costly payment terms and/or the decision by a significant number of vendors not to sell us merchandise on a timely basis or at all, trade restrictions, the ability to monetize non-core assets on acceptable terms, the ability to implement our strategic plan including our omnichannel initiatives, customer acceptance of our strategies, our ability to attract, motivate and retain key executives and other associates, the impact of cost reduction initiatives, our ability to generate or maintain liquidity, implementation of new systems and platforms, changes in tariff, freight and shipping rates, changes in the cost of fuel and other energy and transportation costs, disruptions and congestion at ports through which we import goods, increases in wage and benefit costs, competition and retail industry consolidations, interest rate fluctuations, dollar and other currency valuations, the impact of weather conditions, risks associated with war, an act of terrorism or pandemic, the ability of the federal government to fund and conduct its operations, a systems failure and/or security breach that results in the theft, transfer or unauthorized disclosure of customer, employee or Company information, legal and regulatory proceedings and the Company's ability to access the debt or equity markets on favorable terms or at all.  There can be no assurances that the Company will achieve expected results, and actual results may be materially less than expectations.  Please refer to the Company's most recent Form 10-Q for a further discussion of risks and uncertainties. Investors should take such risks into account and should not rely on forward-looking statements when making investment decisions. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made.  We do not undertake to update these forward-looking statements as of any future date.

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J. C. PENNEY COMPANY, INC.
SUMMARY OF OPERATING RESULTS
(Unaudited)
(Amounts in millions except per share data)