Department store retailer JC Penney plans to use the $1.1 billion in cash, $3.5 billion in proceeds from the sale of Eckerd drugstores and future earnings to buy back shares and cut its debt.

The proceeds from the sale of Eckerd to CVS Corp of Woonsocket, RI, and Canada's Jean Coutu Group Inc will enable Penney to cut debt by $5.7 billion.

Plano-based Penney said July same-store sales rose 8.1 per cent from a year earlier, helped by strong back-to-school sales. Internet sales rose 30 per cent in July, and total sales rose 6.8 per cent to $1.18 billion.

Same-store sales rose 7.1 for the whole quarter, said Penney, which had forecast increases in the low single digits.

As well as cutting its debt, Penney is expected to invest more heavily in the business, such as opening more off-mall stores over the next couple of years.