JCPenney Announces Updated Bridge Plan Targets for 2009

June 25, 2008 11:41 AM EDT

PLANO, Texas--(BUSINESS WIRE)--

J. C. Penney Company, Inc. (NYSE: JCP) today provided an update on certain components of its Bridge Plan, including a further reduction in capital expenditures for 2009. The Bridge Plan is designed to allow JCPenney to successfully navigate the current environment, to maintain strong financial flexibility, and to benefit when conditions improve.

"We have just completed our strategic planning process for the coming year, a period that we expect to remain very challenging for the American consumer," said Myron E. (Mike) Ullman, III, chairman and chief executive officer. "In light of this, we are taking additional steps under our Bridge Plan to effectively balance support of the merchandise and marketing initiatives that differentiate JCPenney with the goal of maintaining a strong financial position. To this end, we will further reduce new store openings and renovations from 2008 levels and continue to focus on rigorously controlling inventory levels and operating expenses."

Ullman continued, "We believe the combination of our merchandising, marketing and pricing programs, together with our prudent capital expenditure plans will allow us to minimize the impact of the difficult retail environment and improve both our competitive positioning and market share."

JCPenney's plans for 2009 now call for a reduction in capital expenditures to approximately $650 million, versus $1 billion expected for 2008, and $1.2 billion in 2007.

    --  This reflects plans to open 20 new or relocated stores in
        2009, down from 36 new or relocated stores that will open, in
        total, in 2008. This compares to previous plans to open 50
        stores each year through 2011. Among the stores that will open
        in late 2009 is the Company's first store in Manhattan, which
        is expected to be its highest sales volume location.

    --  The Company has also reduced its renovation plans to 10-15
        stores in 2009, down from the 20 renovations it expects to
        complete in 2008 and compared to its previous plans to
        renovate 65 stores each year through 2011.

    --  The Company continues to expect total inventories to be below
        2007 levels by the end of the 2008 back-to-school season.
        Going forward, the Company will continue to plan inventory
        levels in alignment with sales expectations.

    --  With better inventory alignment in the second half of 2008,
        the Company continues to expect year-over-year gross margin
        trends to improve in the third and fourth quarters. Operating
        expenses will be managed carefully, but ratios are expected to
        remain under pressure from increases associated with new
        stores as well as lower sales levels.

    About JCPenney

JCPenney is one of America's leading retailers, operating 1,074 department stores throughout the United States and Puerto Rico, as well as one of the largest apparel and home furnishing sites on the Internet, jcp.com, and the nation's largest general merchandise catalog business. Through these integrated channels, JCPenney offers a wide array of national, private and exclusive brands which reflect the Company's commitment to providing customers with style and quality at a smart price. Traded as "JCP" on the New York Stock Exchange, the Company posted revenue of $19.9 billion in 2007 and is executing its strategic plan to be the growth leader in the retail industry. Key to this strategy is JCPenney's "Every Day Matters" brand positioning, intended to generate deeper, more emotionally driven relationships with customers by fully engaging the Company's 155,000 Associates to offer encouragement, provide ideas and inspire customers every time they shop with JCPenney.

This release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which reflect the Company's current views of future events and financial performance, involve known and unknown risks and uncertainties 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, consumer spending patterns and debt levels, the cost of goods, trade restrictions, changes in tariff, freight, paper and postal rates, changes in the cost of fuel and other energy and transportation costs, competition and retail industry consolidations, interest rate fluctuations, dollar and other currency valuations, risks associated with war, an act of terrorism or pandemic, and a systems failure and/or security breach that results in the theft, transfer or unauthorized disclosure of customer, employee or Company information. Please refer to the Company's most recent Form 10-K and subsequent filings for a further discussion of risks and uncertainties. Investors should take such risks into account when making investment decisions. We do not undertake to update these forward-looking statements as of any future date.

Source: J. C. Penney Company, Inc.

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