FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

(Mark One)

      X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2004     Commission file number 1-4947-1

                                       OR

       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

       For the transitional period from ______________ to ________________
                       Commission File No. ______________

                        J. C. PENNEY FUNDING CORPORATION
             (Exact name of registrant as specified in its charter)

    Delaware                                                         51-0101524
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                              Identification No.)

                  6501 Legacy Drive, Plano, Texas 75024 - 3698
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (972) 431-1000
              (Registrant's telephone number, including area code)
        -------------------------------------------------------------
            (Former name, former address and former fiscal year, if
                           changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes       X       No

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes               No       X

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

500,000 shares of Common Stock of $100 par value, as of July 31, 2004.

THE REGISTRANT  MEETS THE CONDITIONS SET FORTH IN GENERAL  INSTRUCTION H (1) (a)
AND (b) OF FORM  10-Q  AND IS  THEREFORE  FILING  THIS  FORM  WITH  THE  REDUCED
DISCLOSURE FORMAT.
                                       1
<page>

PART I - FINANCIAL INFORMATION

Item 1 - Unaudited Financial Statements
        --------------------------------

The following interim financial  information of J. C. Penney Funding Corporation
("Funding"),  a  wholly  owned  subsidiary  of J. C.  Penney  Corporation,  Inc.
("JCPenney"),  is unaudited; however, in the opinion of Funding, it includes all
adjustments,  consisting only of normal recurring accruals, necessary for a fair
presentation.  The financial  information should be read in conjunction with the
audited  financial  statements  included in Funding's Annual Report on Form 10-K
for the 53 weeks ended January 31, 2004.

<table>
<c>                                                                     <c>             <c>
Statements of Income and Reinvested Earnings
(Dollars in millions) (Unaudited)


                                                                         13 weeks ended
                                                                         --------------
                                                                   Jul. 31,         Jul. 26,
                                                                     2004             2003
                                                                     ----             ----

Interest income from JCPenney                                       $    -           $    -

Interest expense                                                         -                -
                                                                      ----             ----


Income before income taxes                                               -                -

Income taxes                                                             -                -
                                                                     -----             ----

Net income                                                               -                -

Reinvested earnings at                                               1,093            1,093
       beginning of period                                           -----            -----

Reinvested earnings at
       end of period                                                $1,093           $1,093
                                                                   =======           ======

</table>
The accompanying notes are an integral part of these unaudited Interim Financial
Statements.


                                       2
<page>

<table>
<c>                                                                     <c>             <c>             <c>
Balance Sheets
(Dollars in millions) (Unaudited)


                                                                     Jul.31,       Jul. 26,          Jan. 31,
                                                                       2004            2003             2004


ASSETS
Loans to JCPenney                                                   $1,238           $1,238          $1,238

LIABILITIES AND EQUITY HELD BY JCPENNEY

Liabilities                                                          $   -            $   -          $    -

Equity held by JCPenney:
        Common stock (including contributed capital), par value
        $100 per share:
        Authorized, 750,000 shares
        Issued and outstanding, 500,000 shares
                                                                      $145             $145            $145

Reinvested earnings                                                 $1,093           $1,093          $1,093
                                                                    ------           ------          ------

Total equity held by JCPenney                                       $1,238           $1,238          $1,238
                                                                    ------           ------          ------
Total liabilities and equity held by JCPenney                       $1,238           $1,238          $1,238
                                                                    ======           ======          ======

</table>
The accompanying notes are an integral part of these unaudited Interim Financial
Statements.

                                       3

<page>

<table>
<c>                                                                             <c>                         <c>
Consolidated Statements of Cash Flows
(Dollars in millions) (Unaudited)




                                                                                          13 weeks ended
                                                                                          --------------
                                                                                  Jul. 31,                Jul. 26,
                                                                                     2004                     2003
                                                                                   ------                  -------
Operating Activities                                                                $   -                   $    -

Financing Activities                                                                    -                        -
                                                                                    -----                    -----


Increase in cash                                                                        -                        -

Cash at beginning of year                                                               -                        -
                                                                                   ------                   ------

Cash at end of second quarter                                                       $   -                  $     -
                                                                                  =======                  =======
</table>

The accompanying notes are an integral part of these unaudited Interim Financial
Statements.


                                       4


<page>


Notes to the Unaudited Interim Financial Statements

1) Background
   -----------

   Historically, Funding has provided short-term financing for JCPenney.
Principally, Funding issued commercial paper to finance JCPenney's working
capital needs. In 2001, JCPenney sold the assets of J. C. Penney Direct
Marketing Services, Inc. to an unrelated third party. The result of this
transaction coupled with JCPenney's other sources of liquidity eliminated the
need for Funding to issue commercial paper for short-term borrowing
requirements. Therefore, Funding has not produced any revenue or income. In
addition, with Funding's current credit ratings, it is assumed that Funding
would have little or no current access to commercial paper borrowing.


                                       5
<page>

ITEM 2. Management's  Discussion and Analysis of Financial Condition and Results
     of Operations.

Funding  derives  earnings  on loans to  JCPenney  under  the  terms of the Loan
Agreement, which provides for unsecured loans to be made by Funding to JCPenney.
Additionally,  in order to maintain Funding's income at defined coverage ratios,
Funding's  income is supplemented by charges to JCPenney.  The income of Funding
is designed to cover  Funding's fixed charges  (interest  expense) at a coverage
ratio  mutually  agreed  upon by Funding  and  JCPenney.  The  earnings to fixed
charges coverage ratio has historically been at least one and one-half times.

When  applicable,  Funding  from time to time issues  commercial  paper  through
Credit Suisse First Boston  Corporation,  J.P. Morgan  Securities Inc.,  Merrill
Lynch Money  Markets  Inc.,  and Morgan  Stanley  Dean Witter to  corporate  and
institutional  investors  in  the  domestic  market.  The  commercial  paper  is
guaranteed by JCPenney on a  subordinated  basis.  No commercial  paper has been
issued or outstanding  since 2000.  The  commercial  paper program is rated "Not
Prime" by Moody's Investors Service,  Inc. and "B" by Fitch Ratings.  Standard &
Poor's Rating Services does not rate the program.

Funding had no short-term  debt  outstanding as of July 31, 2004, nor as of July
26, 2003.

On July 31, 2004, J. C. Penney Company,  Inc.  ("Company") closed on the sale of
its Eckerd  drugstore  operations for a total of  approximately  $4.7 billion in
cash proceeds.  After deducting  taxes,  fees and other  transaction  costs, and
estimated post-closing adjustments, the ultimate net cash proceeds from the sale
are expected to total approximately $3.5 billion.

The Company  intends to use proceeds  from the sale,  as well as $1.1 billion of
cash  reserves to  repurchase up to $3.0 billion of common stock and reduce debt
by approximately $2.3 billion, as announced on August 2, 2004.



ITEM 4.  Controls and Procedures

Based on their  evaluation of Funding's  disclosure  controls and procedures (as
defined in Rules 13a-15 and 15d-15 under the Securities  Exchange Act of 1934 as
of the  end of the  period  covered  by this  Quarterly  Report  on  Form  10-Q,
Funding's  principal  executive  officer and  principal  financial  officer have
concluded  that the design and  operation of Funding's  disclosure  controls and
procedures  are effective for the purpose of ensuring that material  information
required  to be in this  Quarterly  Report is made  known to them by others on a
timely basis. There have not been any changes in Funding's internal control over
financial reporting that occurred during Funding's last fiscal quarter that have
materially  affected,  or are reasonably likely to materially affect,  Funding's
internal control over financial reporting.



                                       6
<page>

PART II - OTHER INFORMATION


     Item 6. Exhibits and Reports on Form 8-K.
             ---------------------------------

          (a)  Exhibits

               31.1 Certification by Michael P. Dastugue pursuant to 15 U. S. C.
                    78m (a) or 78o (d),  as adopted  pursuant  to Section 302 of
                    the Sarbanes-Oxley Act of 2002.

               31.2 Certification  by William J. Alcorn  pursuant to 15 U. S. C.
                    78m (a) or 78o (d),  as adopted  pursuant  to Section 302 of
                    the Sarbanes-Oxley Act of 2002.

               32.1 Certification by Michael P. Dastugue pursuant to 18 U. S. C.
                    Section  1350,  as adopted  pursuant  to Section  906 of the
                    Sarbanes-Oxley Act of 2002.

               32.2 Certification  by William J. Alcorn  pursuant to 18 U. S. C.
                    Section  1350,  as adopted  pursuant  to Section  906 of the
                    Sarbanes-Oxley Act of 2002.

          (b)  Reports on Form 8-K

               None.







                                       7

<page>


                                   SIGNATURES
                                  ------------


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.





                                           J. C. PENNEY FUNDING CORPORATION


                                           By: /s/ W. J. Alcorn
                                               --------------------------------
                                               W. J. Alcorn
                                               Vice President and Controller
                                               (Principal Accounting Officer)



Date:  September 8, 2004


                                       8


<PAGE>



                                                                    Exhibit 31.1

                                 CERTIFICATIONS
                                 --------------

I, Michael P. Dastugue, Chairman of the Board, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of J. C. Penney Funding
     Corporation;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The  registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)   Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     b)   [Intentionally omitted]

     c)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   Disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal  controls over financial  reporting,
     to the registrant's  auditors and the audit committee of registrant's board
     of directors (or persons performing the equivalent functions):

     a)   All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.

Date:  September 8, 2004.
                                               /s/ Michael P. Dastugue
                                               ---------------------------
                                               Michael P. Dastugue
                                               Chairman of the Board
                                               J. C. Penney Funding Corporation

                                       9
<page>




                                                                   Exhibit 31.2
                                 CERTIFICATIONS
                                 --------------

I, William J. Alcorn, Vice President and Controller, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of J. C. Penney Funding
     Corporation;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The  registrant's  other  certifying  officer(s) and I are  responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)   Designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this report is being prepared;

     b)   [Intentionally omitted]

     c)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     d)   Disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

5.   The registrant's other certifying officer(s) and I have disclosed, based on
     our most recent evaluation of internal  controls over financial  reporting,
     to the registrant's  auditors and the audit committee of registrant's board
     of directors (or persons performing the equivalent functions):

     a)   All significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.

Date:  September 8, 2004.
                                                /s/ William J. Alcorn
                                                ---------------------------
                                                William J. Alcorn
                                                Vice President and Controller
                                                J. C. Penney Funding Corporation

                                       10
<page>




                                                                    Exhibit 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of J. C. Penney Funding Corporation (the
"Company") on Form 10-Q for the period ending July 31, 2004 (the  "Report"),  I,
Michael P. Dastugue,  Chairman of the Board of the Company, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:

     (1)  the Report fully  complies with the  requirements  of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.

DATED this 8th day of September 2004.

                                                /s/ Michael P. Dastugue
                                               -------------------------
                                               Michael P. Dastugue
                                               Chairman of the Board
                                               J. C. Penney Funding Corporation

                                       11
<PAGE>



                                                                    Exhibit 32.2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of J. C. Penney Funding Corporation (the
"Company") on Form 10-Q for the period ending July 31, 2004 (the  "Report"),  I,
William J. Alcorn,  Vice  President  and  Controller  of the  Company,  certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

     (1)  the Report fully  complies with the  requirements  of section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.

DATED this 8th day of September 2004.

                                                /s/ William J. Alcorn
                                                -------------------------
                                                William J. Alcorn
                                                Vice President and Controller
                                                J. C. Penney Funding Corporation



                                       12