February 26, 2007, 12:00 AM

The web remains the fastest growing sales channel for J.C. Penney

2006 web sales rose by 25% for J.C. Penney. With 7% of all sales now generated through e-commerce, J.C. Penney’s long-time catalog customers are morphing into web shoppers with a preference for placing most orders online, the company says.

The web remains the fastest growing sales channel at J.C. Penney Co. Inc.

In 2006, web sales grew to $1.3 billion from $1.04 billion in 2005, an increase of 25%. At the same time J.C. Penney, No. 13 in the Internet Retailer Top 500 Guide to Retail Web Sites, posted net income of $1.15 billon on net sales of $19.9 billion in 2006 vs. net income of $1.08 billion on net sales of $18.8 billion in 2005.

In the fourth quarter, web sales rose year-over-year by 17.6%, though the company didn’t break out any specific e-commerce numbers. “JCP.com continues to be our fastest growing channel,” J.C. Penney president and chief merchandising officer Ken Hicks told analysts on the company’s recent year-end earnings call. “In 2006 we completed the rollout of 35,000 new point-of-sale terminals in our stores that are connected to our web site, making it easier for us to offer in-store customers our full assortment of currently over 250,000 SKUs. Early results show that our associates and customers are taking advantage of this capability.”

Overall the web represented 7% of total sales in 2006 vs. 5.5% in 2005. “We continue to manage the transition of our direct channel to that of an Internet-dominated business supported by print catalogs with better customer targeting,” Hicks told analysts. “We find that our print customer is using JCP.com for ordering, making our catalogs a powerful marketing tool.”

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