Setting up the British Woolworths

Articles of Association, Ordinary and Preference Shares for F. W. Woolworth & Co. Ltd.

While scouting the country for possible store locations, the Woolworth party made London their headquarters. Frank and Jennie Woolworth set themselves up in style at the Carlton Hotel in Pall Mall, (then one of London's finest,) joined by their daughter Edna. Meanwhile the boys (Fred Woolworth, Byron Miller and Samuel Balfour) headed for The Waldorf Hotel in Aldwych. Before long there would be another pioneer among their number.

Frank Woolworth felt that one of the reasons that his team was getting such a hostile reception in the UK was because they were American. "I remember one day we were lunching in the Strand", recalled Byron Miller, "and fell into conversation with a man from the States, manager of one of the early picture houses. He made a scraping gesture with his thumb and forefinger and said he was in England for just one purpose, to get all he could out of the 'limeys,' and supposed we were there for the same reason. Woolworth denounced such an attitude as wrong and pointed out to us that this type of American was largely responsible for creating the prejudice we found ourselves facing. This prejudice was so strong that we sometimes met personal abuse."

To tackle the resistance Frank had a plan - recruit an Englishman to his top team. He even had a candidate in mind, a young man that he had met on his buying trips who he had found to be both commercially astute and disarmingly charming. William Lawrence Stephenson worked as a freight clerk and assistant buyer for John Wanamaker's European sourcing operation, which was led by Edward Owen and based in Birmingham.

He sent a carriage from his London hotel to track Stephenson down in Birmingham. The coachman was asked to deliver a handwritten note. This read: "Please join me for dinner in London to discuss a matter that may be to your advantage. F. W. Woolworth." Intrigued Stephenson climbed on board - he had enjoyed his dealing with Woolworth and admired him as a tough negotiator and an innovative purchaser.

At his retirement dinner many years later Stephenson described the events that followed. Mr. Woolworth had been candid, saying "Risk everything and join us and you may retire a very rich man indeed. Or you may end up with nothing." Some years later, in the fullness of his years, the British pioneer left an estate valued at £3,389,636, and had become a legend in the USA, renowned across the American company for "entertaining royalty on his yacht". He told his audience "I was let in on the ground floor and never regretted it".

The Woolworth pioneers arranged to meet with a British solicitor to write the Memorandum and Articles of Association needed to apply to become a British Company under the Companies (Consolidation) Act, 1908. They hired the local solicitor Tom Lamartine Yates, to guide them. The lawyer had well-appointed offices in The Strand, London, WC2 and commuted daily from Morden, Surrey.

Woolworth did not know it at the time, but his Solicitor's wife, Rose, was a leading suffragette and is remembered today as one of the brave Edwardians who secured the vote for women.

Rose Lamartine Yates external website: Merton Council 'My Merton' Magazine, July 2004 (PDF format)

Lamartine Yates took the pioneers step-by-step through the process of setting up a company. Among other things they had to declare a purpose for the business, including an exhaustive list of all the types of business that Woolworths might undertake. Here are some of the things that they came up with:

■ Manufacture, buy and sell (wholesale or retail)
■ Shopkeepers, bazaars, bankers, safe-keepers
■ Poulterers, butchers, bakers and confectioners
■ Nurserymen and florists
■ Deal in, buy, sell and manufacture: candy & sweets, stationery, jewellery, haberdashery, drapery, china, crockery, woodenware, hardware, ironmongery, toys, enamelware, tinware, glassware, toilet articles, millinery supplies, fancy goods and soaps, music and musical instruments, cars, bicycles and tricycles

■ provide reading and smoking rooms
■ safe deposits, phones, lavatories, newspapers
■ refreshment rooms and restaurants
■ make and sell clothing, hats, silkware and gloves
■ act as undertakers, coach builders, saddlers
■ fit gas appliances and installer of electrics
■ import live cattle and sheep, run abattoirs
■ make chemicals and manure
■ buy, sell, rent, build, knock down stores & buildings
■ take on other assets and buy other companies

Over the store chain's 99 years in the High Street it was remarkable how many of these things the company sold at one time or another. The chain sold virtually all of the products listed (including several motor cars in 2006), bought live cattle, lent people money (through a full credit centre operation) and even launched Kids First as an independent charity with its own Trustees. In a cruel twist of fate, it was only the Administrators who had their own version of a Woolworths Funeral Service and an abattoir for the long-serving and dedicated staff.

A Government official signed the incorporation papers on July 23rd, 1909. Frank Woolworth noted in his diary that he was glad he wasn't a superstitious man. Many Americans considered the 23rd an unlucky day, called "Skidoo", a popular phrase of the time. Usage of the word faded out in the second half of the twentieth century, but loosely translated it meant "run away as fast as possible", "sink without trace" or "abject failure"! One suggestion for the choice of 23 is that in Charles Dickens' Tale of Two Cities Sidney Carton was the 23rd person to be executed on the 23rd of the month.

The second challenge for Tom Lamartine Yates was to set up the share capital of the business. F. W. Woolworth & Co. Limited was to be a private company (that is one where the company decides who may own shares) with a golden share retained by the American parent company. All in all this made for a more complicated set-up than usual.

The parent company put up a total of £50,250 to start up their British subsidiary. This was divided into 5,000 preference shares and £10 per share (i.e. £50,000) and 5,000 common shares of 1/- (one shilling or five pence) each making the remaining £250. The American company retained a 66% interest with the British Directors free to buy the remaining shares or to sell them to employees and suppliers.

In the ensuing 20 years the Directors regularly traded shares among themselves (with the values rising very rapidly) and rewarded the most successful store managers with the right to buy five or ten shares. The dividend on ten preference shares by 1920 was £300, a year's wages for a Shop Assistant.

As you will see in the other galleries of the Original Virtual Museum, despite many changes over a century in the High Street, at parent company level the British Woolworths recorded a profit in all but two years of trading - the first and the last. Over 99 years Woolworths shares paid dividends of £710,100,000 - a 1,359,143% return on the original share capital. But even this track record was not enough to save the store part of the company when it lost its way in the 21st Century.