After being forced to close down his first solo venture, Penney went to Longmont, Colorado to work for Thomas Callahan and Guy Johnson, two men who would forever change his life. Callahan and Johnson owned a chain of dry goods stores in Colorado and Wyoming called the Golden Rule stores. Impressed with his work ethic, when Callahan and Johnson were drawing up plans to open a new store in Kemmerer, Wyoming, Penney was their first choice to head it up. He was made a third partner in the store and sent to the town to oversee the store’s operations.
Kemmerer was a mining community with no more than 1,000 residents. There was one other company store in the town that operated on a credit basis, as well as 21 saloons. Penney’s store opened on April 14, 1902. The store itself was just a one-room wooden building, while Penney’s family lived in the attic above. He ran his store based on three key principles: only quality merchandise was to be stocked; price mark-ups were to be kept to a minimum; and every sale was to be on a cash only basis. He decided to fly in the face of tradition and accept cash only for his goods, rather than credit. Penney also placed a tremendous amount of emphasis on superior customer service.
Penney’s recipe was a success. Sales on the first day totaled $466.59, and grew to $28,898.11 by the end of the year. Soon, Penney was given managing duties and one-third ownership at two additional Golden Rules stores. But, Penney was a visionary; he dreamed of expanding the Golden Rules stores throughout the West. When the partnership between Callahan and Johnson began to deteriorate, the two men sold their shares of the chain to Penney. By 1912, Penney was the sole owner of 34 Golden Rule stores, which were bringing in sales of over $2 million.
In 1913, when the chain incorporated under the state laws of Utah, its name was officially changed to the J.C. Penney Company. Penney declared its motto: “Honor, Confidence, Service, and Cooperation.” Over the years, with a supreme focus on customer service and complete customer satisfaction, Penney was able to take his company national. Just four years after its incorporation, the J.C. Penney Company consisted of 197 stores. Penney, at the age of 42, accepted the position of chairman.
By 1928, the J.C. Penney Company’s over 1000 stores were bringing in sales in excess of $176 million. A stroke of bad luck hit the company in 1929, when its shares were listed on the New York Stock Exchange. Just a few days later, the stock market crashed. Penney personally lost $40 million, although the number of stores continued to increase. J.C. Penney’s low-priced merchandise continued to attract customers even throughout the depression.
As he got older, Penney devoted more of himself, and his fortune, to charity. He also invested in a number of ill-fated ventures, including real estate and banks. By 1932, with over $7 million in personal debt, Penney had lost most of his wealth. He returned to his position as chairman of the company and slowly began to rebuild his wealth, but it would never be as much as he once had. Penney died of a heart attack at the age of 95. Today, the company he founded remains one of the largest retailers in the U.S.