• by Sarah Mahoney  @mahoney_sarah, May 18, 2007

Thanks to its new "Every day matters" branding campaign and a concerted switch to private-label brands, J. C. Penney Co. reported record profits, with net income gaining 13.3%, to $238 million, in the first quarter.

Sales climbed 3.1%, to $4.35 billion, and comparable store sales increased 2.2%, in line with the company's expectations.

The best results were in women's apparel, buoyed by Penney's recent introduction of Ambrielle, a lingerie brand that is the company's largest private brand launch to date, as well as exclusive Liz & Co. and CONCEPTS by Claiborne lines. Women's jewelry and accessories also sold well.

The sore spot-as is true for several large retailers in recent months-continues to be home furnishings. Internet sales at the company that was once the king of catalogs gained 18%, on top of a 22% jump in last year's first quarter.

Penney is rapidly expanding its private-label clothing. So far this year, it has announced another massive private-brand launch, designed by Polo Ralph Lauren Corp.'s private-label unit. Called American Living, the clothing and home products line is expected to debut next spring. And it's got a previously announced partnership with Chip & Pepper Productions, normally best known for its high-end, ultra-hip jeans, for an exclusive line of separates.

The company also increased its earnings forecast for the full year, and said it expects same-store sales gains in the "low- to mid-single digits" in the second quarter, which includes the beginning of the critical back-to-school selling period.