The 1,001 Partners

In 1,563 U.S. cities and towns, most of them under 10,000 population, the unpretentious fac,ade of J. C. Penney Co. is as familiar as Main Street. The farmer who goes to town usually stops at Penney's, and so do the townsfolk who don't mind cash & carrying from Penney's to save dollars. This habit of year-in & year-out buying at Penney's has built the company, which has stores in every state, into the third biggest U.S. retail chain. Last year, only Sears, Roebuck & Co. and Montgomery Ward & Co., Inc. sold more goods than J. C. Penney, which rang up a whopping $885 million gross and a $47.8 million net.

Last week, at a time when U.S. retailers were feeling a sag in sales (average: 4%), Penney's was still booming. In the first five months this year, its sales of $305 million were 5% higher than in 1948. Penney's was completing three new stores (in Houston, Sault Sainte Marie, Mich, and Midvale, Utah), expanding its store in Albuquerque, opening another one in Oklahoma City. Next January it will also open a big new store in Springfield, Mass., its 1,608th outlet.

Poverty & Progress. All this grew from a single store which 27-year-old James Cash Penney started 47 years ago in the mining town of Kemmerer, Wyo. (pop. 1,000). Young Penney, frail and ailing, had gone West for his health from Hamilton, Mo., where he grew up in poverty on the farm of his father, an unpaid Baptist preacher. From the age of eight, young J.C. had to buy his own clothes; at 19 heard his dying father murmur: "Jim will make it. I like the way he has started out."

In tiny Kemmerer, just about everybody bought on credit, hence paid high prices. Jim Penney had a better idea: cash on the barrelhead. More important, at a time when most small-town retailers firmly believed it was good business to make a big profit on small volume, Penney subscribed to a still revolutionary idea; he wanted to make a small profit on each item, thus build big volume and a big profit.

He missed few bets. At night, before locking up, Penney always looked up & down the street so as not to lock out any late customers. By the end of his first year he had grossed $28,898.11--big money for a whistle stop. Soon Penney had surplus cash to buy stores in other towns, looked around for likely local partners. By 1912, he had 34 stores, grossing $2,000,000 a year.

Penney chose his partners carefully, paying as much attention to the wife as to the man ("a good woman's power to encourage is well nigh unlimited"). Once he found the right partner, he gave him a share of any profits and trusted him completely. By 1924 he was calling himself "the man with a thousand partners." Penney's 50,000 "associates" (employees) still share in the profits after a year's service.

Penney, though no longer active in the company, is chipper and full of beans at 73, and still picking partners--for his latest enterprise, livestock farming. He got into that after he bought his father's old Missouri homestead, then looked around for the right man to run it. Soon, he had eight farms and as many partners, all drawing on Penney's "partnership fund." Asked if he was not afraid that his partners would spend his money unwisely, Penney replied: "No, if they didn't have good judgment they wouldn't be my partners."

Good Times & Bad. When Jim Penney stepped out as chairman of his company in 1946, Earl Corder Sams, the first partner Penney ever hired (in 1907), stepped in. Into Sams's job as president moved the company's present boss, grey-haired, quick-smiling Albert William Hughes, now 58. A onetime prep-school teacher, Hughes, like every other Penney director, has worked up through the ranks. He has managed the difficult task of keeping Penney's cracker-barrel flavor without getting oldfashioned.

Penney's biggest sellers are women's cheap but neat dresses (now $5.90 to $14.75) and men's work clothes. President Hughes has togged out some new Penney stores (e.g., Cincinnati's, opened last year) in chrome-bright modern design. But Penney's still sticks to its low overhead and markup by avoiding such merchandising frills as deliveries and credit. Hughes thinks Penney's is as recession-proof as any U.S. enterprise. As one partner put it: "When times are lush, we cater to the low-income group; when times are bad, we cater to everybody."

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