FIRST QUARTER 2018 EARNINGS CALL - May 17, 2018 - cloudfront.net

FIRST QUARTER
2018 EARNINGS
CALL

May 17, 2018

FORWARD-LOOKING
       STATEMENTS

    This document may contain forward-looking statements within the meaning
    of the Private Securities Litigation Reform Act of 1995. Forward-looking
    statements include, but are not limited to, statements regarding sales, cost
    of goods sold, expenses, earnings, adjusted EBITDA, and cash flows.
    Forward-looking statements are based only on the Company’s current
    assumptions and views of future events and financial performance.
    Forward-looking statements are subject to known and unknown risks and
    uncertainties, many of which are outside of the Company’s control. 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-K for a 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 document is based only
    on information currently available to us and speaks only as of May 17, 2018.
    We do not undertake to update these forward-looking statements as of any
    future date.

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2018 FIRST QUARTER
    PERFORMANCE

                                   1Q-18     vs.   1Q-17

     Comparable store sales        0.2%            +370bps

     Cost of goods sold            66.3%           +240bps

     SG&A                          32.0%           -270bps

     Adjusted EBITDA (non-GAAP)*   $151M           -$87M

     Adjusted EPS (non-GAAP)*      ($0.22)         -$0.23

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2018 FIRST
    QUARTER
    HIGHLIGHTS
    ▪ Merchandise Initiatives
        Enhanced partnerships with Nike, Adidas, Champion and
        Puma
        Introduced Fitbit into our assortment of health and wellness
        products
        Announced a partnership with Shaquille O’Neal as part of
        our special sizes initiative
        Underwent a major redesign and refresh of our Okie Dokie
        children’s private brand
        Launched our fashion tween brand, Obsess, which
        features rotating capsule collections inspired by influential
        young women

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2018 FIRST
    QUARTER
    HIGHLIGHTS
    ▪ SG&A Leverage
       Store controllable costs
       Advertising efficiencies
       $30 million gain on sale of leasehold interest

    ▪ Enhanced Capital Structure
       Retired $190M in notes, at maturity, in February 2018
       utilizing cash on hand
       Issued $400 million in senior secured second priority
       notes due 2025
       Utilized proceeds from new issuance to successfully
       complete tender offer for $375 million aggregate
       principal amount of outstanding 2019 and 2020
       bonds
        • Currently have $50 million of debt maturing in October
          2019 and $110 million maturing in June 2020
        • No significant unsecured debt maturities until 2036
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STRATEGIC
PRIORITIES

POWER OF
                                                        JCPENNEY

           2013                                                              TODAY

    • JCPenney Salon                                    • InStyle Salon        • Optical
                             Services
    • Optical                                           • Home Services        • LifeTouch/Shutterfly

                                                        • Appliances
                                                                               • Apparel
    • Apparel                                           • Housewares
                                                                               • Shoes
    • Shoes                    Offering                 • Toys
                                                                               • Endless Aisle Online
    • Housewares                                        • Furniture
                                                                               • Business-to-Business
                                                        • Mattresses

                                                        • Sephora
                                                                               • Michael Strahan
                                   Partnerships         • Ashley Furniture
    • Sephora                                                                  • Shaquille O’Neal
                                                        • InStyle
                                                                               • Fanatics
                                                        • Trane

    • No “Ship from Store”                              • All Stores
                                          Omnichannel     “Ship from Store”    • Tech driven platform
    • Minimal Mobile
                                                        • 4.5 Star Rated App   • BOPIS
      Presence                                          • +50% SKUs

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SALES
    OPPORTUNITIES
                      TODAY   EXPECTATIONS

      Apparel

      Appliances

      Beauty

      Dot.com

      Fine Jewelry

      Mattresses

      Special Sizes

      Toys

      Work Wear

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OUR
     STRATEGIC
     FRAMEWORK

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2018 GUIDANCE
 2018 GUIDANCE

        Comparable store sales    Positive 0.0% to 2.0%

       Adjusted EPS (non-GAAP)*      ($0.07) to $0.13

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