Three Years and Out

When William Bishop Warner and Lionel J. Noah became masters of American Woolen Co. in 1930, the company had lost $10,000,000 in three years and stockholders had actually thought of giving up. Dividends on common stock had ceased in 1924. Wool prices had fallen from $1.55 in 1925 to 65-c- in 1930. A thin-lipped Yankee named Andrew Pierce had done all he could to reorganize the company after a fatal post-War spending and production boom had piled up huge unsalable inventories. The year he resigned the deficit was the third biggest in the company's history. Neither Mr. Warner, who became chairman of the executive committee, nor Mr. Noah, who became president, had ever run a woolen mill. But Mr. Warner, as president of McCall Corp. (publishers of McCall's Magazine), was an expert on merchandising and style promotion. Mr. Noah, as vice president of Gimbel Bros., Philadelphia, knew the department store trade. Their problem was to consolidate manufacturing units, to sell all that American Woolen produced, to guess what styles the public wanted before the public knew itself. A most modest man, Mr. Warner warned newshawks to wait two years to see if he could pull American Woolen out of the red before writing him up as a business hero worthy of the laurels of the Press. At the end of the second year the company's deficit was $7,269,000--the worst on record. Mr. Warner certainly did not look heroic to his stockholders. But last week, at the end of the third year, American Woolen announced its earnings for 1933. For the first time in six years it had made money--$7,053,000. And for the first time in seven years it declared a dividend ($1.25) on the preferred stock. Chairman Warner had been in the dry goods business most of his life before he took over American Woolen. At the age of 18 he was traveling around the country in a big wagon filled with 20 trunks of merchandise. He went to McCall's in 1919, the year its publisher boasted that the "wolf wasn't at McCall's door, it was way inside." Without additional financing and by sheer merchandising ability he doubled sales in four years, pushed them to a peak of $14,000,000 in 1930. But neither he nor President Noah was willing to go into American Woolen on salary alone. They made a deal to collect a bonus on all that American Woolen earned over $2,000,000. At the time the company did not mind granting this privilege, since it had just lost $4,897,000. On the basis of earnings announced last week, Chairman Warner will collect over $168,000.

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