rs.

STUDIES IN SECURITIES

Capitalization originally consisted of $15,000,000 7% preferred
stock and $50,000,000 common, $100 par value, the latter representing
 $50,000,000 of good-will on the balance sheet. In the past
fifteen years, the $15,000,000 preferred stock has been retired
and the $50,000,000 good-will written down to $1, all out of earnings.
 In 1920 a 30% stock dividend was declared on the common
stock, in 1924 the par value of the common was reduced to $25
from $100 by the issue of four new shares for each one of old stock,
and in February, 1927, a 509% stock dividend was declared, bringing
 the capitalization now to 3,900,000 shares of $25 par common
stock. There are $3,432,500 purchase money mortgages outstanding
 and a contingent liability on $10,000,000 guaranty of obligations
 on the Woolworth Building, latter easily protected by the
building’s value.

At the end of 1926 current liabilities were $4,294,000 (including
$3,700,000 tax reserve) and current assets $49,373,000 (including
$17,244,000 cash).

Real estate and buildings owned and leased are carried at $20,
270,000 on the books, and rental receipts in 1926 from leases and
subleases amounted to $2,140,000. The company charges off 5%
per annum for depreciation of fixtures and 215% on buildings.
The speculative possibility in Woolworth shares is two-fold :

1. Since 1906 the sales have increased each year without fail
and net profits with few exceptions; in the first quarter of
1927, 25 new stores were opened in the United States (making
the total 1505) and at least 50 more will follow before the
year ends; from 1912 to 1926 the capitalization per store
decreased from $103,000 to $44,000, whereas sales per store
increased from $96,000 to $171,000 and profits from $8,600 to
419.000.

92. Woolworth has a majority interest in its English subsidiary
 which operates 242 stores in the British Isles and
plans 50 additional in 1927. In 1926 the book value of the
interest in the English company was written up $13,566,000
to $14,505,000. The invasion into Germany will show perhaps
 10 stores operating by this year-end.

The 1926 net was equal to the current $5 dividend on the enlarged
stock once and a half times, and 1927 indicates a new record of
sales and even a better margin of profit than 1926. The steadiness
of this company’s expansion gives assurance to the $5 dividend
and its past record of growth is the basis of expectation of larger
income return.

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