Albert William Hughes

Background

Hughes was born in Skaneateles, New York, in 1891, to Lillian Foote and Charles John Hughes, a hardware retailer. In 1903 the family relocated to Hamilton, N. Y.

Education

In Hamilton, N. Y. , Hughes received his high school education at Colgate Academy and then attended Colgate University, from which he graduated Phi Beta Kappa in 1911.

Career

He also took his first job in Hamilton, working in a variety store, doing various chores – cutting cheese, filling kerosene cans, sorting stock – for twenty-four cents per day "and all the candy [he] could eat. " After graduation from Colgate, Hughes took a position at the Hill School, in Pottstown, Pa. , teaching Latin. Students gave him the nickname "Caesar, " but he did not want to make teaching his career; he wanted to go into business.

Among the students at Hill School were two sons and two nephews of James Cash Penney, founder of the J. C. Penney stores, whom he met when Penney visited the school. Penney had opened the Golden Rule store in Kemmerer, Wyo. , in 1902, with the slogan "Live better for less. " The Golden Rule sold only on a cash-and-carry basis and carried only soft goods with low margins but high turnover. To open new stores, Penney used a unique partnership system in which each store manager was a one-third owner of the store he managed and paid for his share through his work; thus there was no initial capital requirement to become a manager and part owner. Managers also had absolute autonomy in running their stores, deciding everything from the selection of goods and pricing to advertising. Supposedly Penney tried to dissuade Hughes from leaving teaching, telling him he could make only $75 per month, but Hughes insisted on pursuing retailing.

In 1919, after eight years of teaching, Hughes moved to Moberly, Mo. , to work for Penney; his salary was more than promised, a full $100 per month; the Moberly store would be, in Penney's opinion, a true test of Hughes's ability: "For any man that can sell merchandise in Missouri can sell it anywhere. " In Moberly, Hughes worked for one of Penney's best store managers, John F. Weber, and like his first job in a variety store, Hughes did everything – swept floors, sold shoes, washed windows, and unpacked merchandise. He also learned to sell.

When he finished his apprenticeship with Weber, Hughes moved to Eureka, Utah, as first man in the Penney store there, which had been opened in 1909 by Earl Corder Sams, Penney's first partner in 1907, who had become company president in 1914 (serving in that office until 1946). Hughes became manager in 1923 and quickly made his mark, generating the best sales and highest profits achieved at the Eureka store. Ironically, Sams reprimanded Hughes for his profits – they were excessive, revealing that Hughes was taking too large a margin on each sale. Penney intended to make its profits from high volume, not high margins, but Hughes had demonstrated that he both understood and could implement Penney's single-minded focus on high-quality customer service.

Late in 1924, Hughes moved to Athens, Ga. , to open and manage a new store. In 1926, because of his unbroken success as a retail store manager, Sams brought him to Penney headquarters in New York City to work in the personnel department. By then the company had 750 stores in forty-five states and sales of $116 million. In 1930, Sams appointed Hughes assistant to the president; in 1933 he was elected to the board of directors and in 1937 became a vice-president and head of personnel. In 1939 Hughes designed and implemented a retirement plan covering all Penney employees. In 1940 he was promoted to executive vice-president, becoming the designated successor to Sams. In 1942 Penney surpassed Woolworth's and became the nation's third largest nonfood merchandiser in the United States, behind only Sears, Roebuck and Montgomery Ward.

In 1946, with total sales approaching $700 million, Penney retired from his position as chairman of the board, taking the title of honorary chairman; Sams moved up to chairman and Hughes became the company's third president. Hughes faced a variety of challenges to maintaining Penney's growth. The company had a substantial majority of its stores west of the Mississippi River; expansion would have to come in the East, against well-established competitors. Penney stores still sold low-margin goods that had made the Golden Rule stores a success – soft goods such as work clothes, yard goods, men's shirts, women's hosiery, blankets, sheets, and house dresses; it still did not sell hardware, home appliances, cosmetics, or jewelry and did not offer credit sales or a catalog. Hughes, known for his bright bow ties, pursued an aggressive expansion, emphasizing moving stores into larger facilities, typically rented to give the company maximum flexibility in choosing locations.

By the middle 1950's the company was opening nearly three dozen new stores annually, and Penney soon had stores in every state except Alaska and Hawaii. Because each store manager was wholly responsible for operation of that store, Hughes kept the central office focused first on developing capable managers and service-oriented staff, declaring in 1956, "Our chief interest is in people. It is all a matter of having the right man in the right place with a sense of responsibility and the authority that goes with it. " His second objective was assuring that the central buying organization offered managers quality merchandise at competitive prices; nearly 90 percent of goods sold in the chain carried the Penney label. To ensure uniform quality in its goods, Hughes opened a company laboratory in New York.

He maintained supervision of the nearly 1, 700 stores through an eight-man operating committee with thirty-five district managers organized into five zones. The emphasis on people and service gave Penney a fine reputation among customers, while its lean structure gave it the industry's lowest expense ratio. In 1958, Hughes became chairman of the board. Sales had surpassed $1. 4 billion, more than twice the level of 1946; profits were nearly $47 million. The company had no debt, having financed its highly successful expansion entirely out of retained earnings. That same year, the company began to offer sales on credit and opened its first discount store and its first full-line department store, which carried white goods (home appliances), hardware, cosmetics, and jewelry. In 1962 the company decided to open a catalog division, publishing its first catalog in 1963. Hughes continued as chairman until 1964 and served on the board until 1969.

Hughes retired to his home in suburban Larchmont, N. Y. He died in New Rochelle, N. Y.

Achievements

• Under his leadership, the J. C. Penney Company had grown into a full-line dry-goods competitor and moved into second place among American merchandisers, behind only Sears.

Interests

• His favorite hobby was gardening.

Connections

On July 6, 1920, Hughes married Gertrude Whitaker; they had three children.

Father:

Charles John Hughes

Mother:

Lillian Foote

Spouse:

Gertrude Whitaker

References

• Main Street Merchant; The Story of the J.C. Penney Company