On Thursday, department store retailer J.C. Penney (NYSE:JCP) posted another quarter of respectable sales and impressive earnings gains. Better yet, Penney's could just be getting warmed up: It recently announced ambitious long-term goals.

Total sales growth has averaged only a couple of percent over the past three years at Penney's, but it might be picking up, finally. Total sales advanced 4.4% during the first quarter, while same-store sales improved 2.2%. And last month, management announced plans aimed at annual total department store sales growth in the mid- to high-single digits over the next five years. This will include 250 new stores, as well as relocations and improvements in existing locations.

Diluted earnings jumped 16.9% during the first quarter, and management is calling for 16% earnings growth from 2008 to 2011. In other words, Penney's is planning to leverage a lower level of top-line growth into a much higher level of profits. This is indeed impressive, and the company has quite a bit of credibility, because a restructuring plan begun in 2000 has been paying off handsomely for more than four years now.  

The first phases of the turnaround consisted mostly of cutting costs and sprucing up the stores by offering a better atmosphere and more attractive merchandise mix. These moves appear to now be part of the corporate culture; the press release from Thursday mentioned a continued move to higher-margin private-label brands, new brand lines from Liz Claiborne (NYSE:LIZ) and Chip & Pepper Productions, and better inventory management.

Capital spending has definitely increased as the company opens new stores and revitalizes existing ones. Penney's also has a higher percentage of debt to total capitalization compared with peers such as Sears Holdings (NASDAQ:SHLD), Bon-Ton Stores (NASDAQ:BONT), and Federated Department Stores (NYSE:FD), owner of the venerable Macy's stores.

However, based on forward expectations, Penney's is trading at a reasonable 15 times earnings, which is among the lowest of the peer group. It also pays a 1.1% dividend yield and has been aggressively buying back shares. Throw in a projected 16% increase in annual earnings over the next few years, and J.C. Penney could beat Target (NYSE:TGT) and Wal-Mart (NYSE:WMT) -- two retailers that had grown accustomed to beating up on the old-line chains. Not any longer, it appears.               

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. The Fool has an ironclad disclosure policy. Feel free to email him with feedback or to discuss any companies mentioned further.