When did JCPenny stop selling fabric? I don't know, but I bought fabric in 1967 there for a dress. I was working in a department store that had a dress policy for all of their employees. We could wear black, navy blue or dark brown. I made a dark brown dress from my JCPenny fabric and was so proud of it. Wore it daily with different colored "mod" scarves to make it interesting.
Until about the mid- 1970's JCPenny was a true old fashioned department store with all items from work boots and "dungarees" to large appliances and costume jewelry and grandpa's long johns all at a mid-range price point for the middle class shopper. Not so different from now but minus the fabric and sewing notions.