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 26, 2003       Commission file number 1-4947

                                       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 September 3, 2003.

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 52 weeks ended January 25, 2003.


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

                                                          13 weeks ended                  26 weeks ended
                                                          ______________                  _______________
                                                       Jul. 26,          Jul. 27,      Jul. 26,         Jul. 27,
                                                          2003              2002          2003             2002
                                                       _______           _______       _______          _______
Interest earned from
        JCPenney and affiliates                           $  -              $  -          $  -             $  -

Interest expense                                             -                 -             -                -
                                                           ___               ___           ___              ___

Income before income taxes                                   -                 -             -                -

Income taxes                                                 -                 -             -                -
                                                           ___               ___           ___              ___

Net income                                                   -                 -             -                -

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

Reinvested earnings at
       end of period                                    $1,093            $1,093        $1,093           $1,093
                                                        ======            ======        ======           ======
</table>
                                       2
<page>


Balance Sheets
(Dollars in millions) (Unaudited)
<table>
        <c>                                             <c>                 <c>            <c>
                                                       Jul. 26,          Jul. 27,       Jan.25,
                                                          2003              2002          2003
                                                       _______           _______        ______
ASSETS
Loans to JCPenney and affiliates                        $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>
                                       3
<page>
<table>
Consolidated Statements of Cash Flows
(Dollars in millions) (Unaudited)

                                                      26 weeks ended
                                                      _______________
        <c>                                       <c>              <c>
                                               Jul. 26,        Jul. 27,
                                                  2003            2002
Operating Activities                              $  -            $  -

Financing Activities                                 -               -
                                                   ___             ___

Increase in cash                                     -               -

Cash at beginning of year                            -               -
                                                   ___             ___

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


2) Subsequent Events
   _________________

On August 15,  2003,  JCPenney's  bondholders  exercised  their option to redeem
approximately $117 million of $119 million 6.9% Debentures Due 2026. On the same
date,  JCPenney  retired $37.5 million of its 8.25%  Debentures Due 2022 at par,
through the  mandatory  sinking  fund  payment of $12.5  million  and  available
optional  sinking  fund  payments  totaling  $25  million.  Also in August 2003,
JCPenney  purchased  approximately  $12.8  million  of the  8.25%  Sinking  Fund
Debentures Due 2022. These purchases,  together with the $4.1 million  purchases
in the second quarter of 2003, will be applied to unspecified  future  mandatory
sinking fund payments.


                                      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  during  the first  half of 2003.  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 26, 2003, nor as of July
27, 2002.

JCPenney's financial condition remains strong with approximately $2.6 billion in
cash  and  short-term  investments  as  of  July  26,  2003,  which  represented
approximately 43% of the $5.8 billion of outstanding  long-term debt,  including
current  maturities,  and  proceeds  of  approximately  $250  million  from  the
securitization  of Eckerd managed care  receivables.  Included in the total cash
and short-term investment balance were restricted short-term investment balances
of $87 million as of July 26, 2003,  which are pledged as collateral  for import
letters of credit not included in the bank credit  facility and for a portion of
casualty program liabilities.

On June 16, 2003,  JCPenney retired $25 million of its 9.75% Debentures Due 2021
at par through a mandatory  sinking  fund  payment and an optional  sinking fund
payment.  During the quarter,  JCPenney also  purchased  $4.1 million  principal
amount of its 8.25% Sinking Fund Debentures Due 2022 for application to a future
mandatory sinking fund payment.

On August 15,  2003,  JCPenney's  bondholders  exercised  their option to redeem
approximately $117 million of $119 million 6.9% Debentures Due 2026. On the same
date,  JCPenney  retired $37.5 million of its 8.25% Sinking Fund  Debentures Due
2022 at par,  through a  mandatory  sinking  fund  payment of $12.5  million and
available  optional sinking fund payments  totaling $25 million.  Also in August
2003,  JCPenney purchased  approximately $12.8 million of the 8.25% Sinking Fund
Debentures Due 2022. These purchases,  together with the $4.1 million  purchases
in the second quarter of 2003, will be applied to unspecified  future  mandatory
sinking fund payments.

During the first quarter,  JCPenney completed two transactions that strengthened
its overall  liquidity  position.  First,  on February 3, 2003,  JCPenney raised
approximately  $50  million  by  securitizing  additional  Eckerd  managed  care
receivables.  Second,  on  February  28,  2003,  JCPenney  issued  $600  million
principal  amount of unsecured 8% Notes Due 2010 at an effective  rate of 8.125%
with J. C. Penney Company,  Inc., JCPenney's parent corporation,  as co-obligor.
Additional  liquidity  strength  includes  the  available  $1.5  billion  credit
facility  discussed  in  JCPenney  Company,  Inc.'s  2002  10-K and  significant
unencumbered  assets,  primarily  Eckerd  Corporation's  FIFO  inventory,  which
totaled $2,430 million at July 26, 2003, that could be used to secure additional
short-term funding,  if needed. No borrowings,  other than the issuance of trade
and stand-by letters of credit,  which totaled $227 million as of the end of the
second quarter of 2003, have been made under this credit facility. 6
<page>


For the  remainder  of 2003,  JCPenney's  management  believes  that  cash  flow
generated from  operations,  combined with the short-term  investment  position,
will be adequate to fund cash  requirements  for capital  expenditures,  working
capital and  dividend  payments  and,  therefore,  no external  funding  will be
required.  On May 29,  2003,  Standard & Poor's  (S&P)  downgraded  J. C. Penney
Company and its  subsidiaries'  corporate  credit,  senior unsecured and secured
bank loan ratings to BB+ from BBB-.  This change  brought the S&P rating more in
line with the Moody's and Fitch ratings. This change has not impacted JCPenney's
liquidity  or  financial  position as the lower  credit  rating had already been
incorporated  into  the  long-term  financing  strategy.  JCPenney's  management
believes  that  JCPenney's  financial  position  will  continue  to provide  the
financial flexibility to support its turnaround initiatives.



ITEM 4.  Controls and Procedures

Based on their  evaluation of Funding's  disclosure  controls and procedures (as
defined in Rules  13a-14(c) and 15d-14(c)  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.



PART II - OTHER INFORMATION


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

          (a)  Exhibits
               ________

               31.1 Certification of Michael P. Dastugue Pursuant to Section 302
                    of the Sarbanes-Oxley Act of 2002

               31.2 Certification  of William J. Alcorn  Pursuant to Section 302
                    of the Sarbanes-Oxley Act of 2002

               32.1 Certification of Michael P. Dastugue Pursuant to Section 906
                    of the Sarbanes-Oxley Act of 2002

               32.2 Certification  of William J. Alcorn  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 ____, 2003

                                       8

<page>
                                                                   Exhibit 31.1

                                  CERTIFICATION
                                  _____________

I, Michael P. Dastugue, Chairman, 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 control over financial reporting, to
     the registrant's auditors and the audit committee of the 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 ____, 2003.
                                               /s/ Michael P. Dastugue
                                               ___________________________
                                               Michael P. Dastugue
                                               Chairman of the Board
                                               J. C. Penney Funding Corporation
                                       9

<page>

                                                                   Exhibit 31.2

                                  CERTIFICATION
                                 _______________

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 control over financial reporting, to
     the registrant's auditors and the audit committee of the 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 ____, 2003.
                                             /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 26, 2003 (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 _____ day of September 2003.

                                               /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 26, 2003 (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 _____ day of September 2003.

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


                                       12