Schulte's Lows

"David A. Schulte is behind Vivaudou, Inc. Nothing that David A. Schulte touches ever freezes. The entire business history of David Schulte has been centered on making capital work faster by setting loose forces that make merchandise move faster." So read an advertisement in the July, 1928, Drug Topics. Signing the statement was Vivaudou President Thomas J. McHugh.

Last week David Albert Schulte resigned as chairman of the Vadsco Sales Corp., holding company that absorbed Vivaudou last December. The reason given by President McHugh, who together with Broker Jules S. Bache bought Schulte's Vadsco stock, was that the Schulte-United 5-c- to $1 Stores were cutting prices, a merchandise-moving policy competitive to the interests of Vadsco's small retail customers. Asked to choose between companies, Mr. Schulte had decided to remain with his stores.

Logical as was this explanation, followers of the Schulte fortunes wondered if it were not another circumstance in the chain of events that seem to indicate that Schulte prosperity no longer zooms ahead at its onetime remarkable pace.

An inspiration to young boys has long been the story of David Schulte, clerk in a small tobacco shop near Brooklyn Bridge, who rose to be head of the second largest U. S. chain of cigar stores, then entered into real estate and merchandising deals that involved millions. Many a feature article has described quick-speaking, efficient, firm-jawed Mr. Schulte who took no vacation for 24 years and said his only hobbies were "business and family." Although of late Mr. Schulte has taken many vacations to Palm Beach, and learned to play games, his name has remained a symbol of hard-earned wealth.

Yet if last week keen-eyed Mr. Schulte were sitting in his office, famed for its cramped dinginess, he might well have pondered over the following table:

Last

1928 1929 week's

high low close

Schulte Retail Stores

Common ....... 67 1/2 16 18 3/4

8% pref. cum.....129 90 92

Schulte-United 5-c- to $1

Stores, Common ........ 28 7/8 4 7 1/8

7% conv. cum. pref .... 100 3/4 30 55 1/4

Schulte Real Estate .... 44 7/8 15 18

Park and Tilford ..... 98 42 7/8 44

Dunhill International .... 99 5/8 45 5/8 54 1/2

Vadsco (given share for share for Vivaudou) Common. 25 3/8 6 1/4 8 1/2

7% conv. cum. pref .... 100 67 1/4 73 3/4

Significant events taking place during this decline included:

Last week, Schulte-United 5-c- to $1 Stores was forced to borrow money at 10% by offering stockholders 7% bonds at 70. Instead of having a bank underwrite the issue, it was done by Mr. Schulte himself. Also last week it was announced Schulte Associate George J. Whelan had sold his interest in the 5-c- to $1 stores. While at the height of the 1928 Schulte boom it was predicted the stores would have soon 1,000 or 3,000 units, there were last week less than 100.

Leaving Yale his Sophomore year (1926), Arthur David Schulte had been made vice president of Park and Tilford, Schulte-controlled. Last year it was announced Park and Tilford would form a chain of retail grocery stores. Son Schulte remained a vice president, became a director of other Schulte companies, but no Park and Tilford expansion took place.

Whereas last year Schulte Retail Stores formed an alliance with the United Cigar Stores, seemed impregnable, this year cigaret price-cutting slashed into the profits. A report in April disclosed that of seven directors David A. Schulte held 33,000 shares of common stock, Joseph M. Schulte 202, another director 10, the remaining four none. On May 1 the dividend was passed.