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.

Kurt Peters

Executive Editor

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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