More store closings and layoffs at Phar-Mor

Discount Store News, March 15, 1993

YOUNGSTOWN, Ohio - Phar-Mor will close an additional 31 stores, which the company said are unprofitable, and layoff an unspecified number of headquarters employees, in a bid to speed up its emergence from Chapter 11.

According to new ceo Tony Alvarez, the company now has more reliable financial information, which should allow it to more speedily implement its plan of reorganization.

"On the basis of more reliable information," Alvarez said, "it is clear that Phar-Mor lost more money in previous years than originally estimated. While we've made substantial progress in turning Phar-Mor around, we are now prepared to move quickly to close unprofitable stores, focus our resources in our core markets, and make the additional operating expense reductions made necessary by a reduced store base."

At the same time, Phar-Mor also held a grand re-opening of its Boardman, Ohio, flagship unit earlier this month. The remodeled unit represents the new, more tightly focused merchandising strategy of the once-high-flying deep discount chain.

In addition to the reopening of the Ohio unit, Alvarez said that Phar-Mor has taken a number of other positive steps since filing for Chapter 11 last August. The strides include: Improved liquidity (to $233 million from $50 million at the time of Chapter 11 filing); restoration of a normal flow of goods from key vendors; a rebuilt management team, which include Alvarez, president and coo Dave Schwartz, cfo Daniel J. O'Leary, and vp/controller Thomas W. Garvey; and a stabilized financial position through the negotiation of a $150 million DIP facility.

Alvarez further said that although comparable store sales have declined in the past six months, the rate of operating losses has also been reduced. The closing of unprofitable stores and significant operating cost reductions have made the company more profitable.

According to president and coo Schwartz, who has been placed in charge of producing within a period of 60 days a comprehensive strategy that will help increase store efficiency and improve marketing and merchandising programs, "at the completion of the [store closings] we will have a solid foundation of profitable stores operating in the right markets . . . Increased operating efficiency will allow us to maintain the low prices that have made Phar-Mor famous and give us the flexibility to implement new operating and merchandising strategies."

The 31 closings, which must be improved by the Bankruptcy Court, follows the liquidation 55 stores late last year. The company will operate 224 stores after the closings.

Markets most affected include Ohio (5 stores), Tennessee (4), Florida (3), Illinois (3), and Wisconsin (3).

     Phar-Mor Store Closings
State                City(ies)
Ohio (5)             Cincinnati (3), Franklin, Sandusky
Tennessee(4)         Memphis (2), Clarksville, Franklin
Florida (3)          Olando, Sunrise, Sarasota
Illinois (3)         Aurora, Homewood, Marion
Wisconsin (3)        Brookfield, Brown Deer, West Allis
North Carolina (2)   Raleigh, Charlotte
Arizona              Phoenix
Colorado             Colorado Springs
Delaware             Dover
Iowa                 Waterloo
Louisiana            Lafayette
Missouri             St. Louis
New Jersey           Turnersville
New Mexico           Albuquerque
New York             Niagara Falls
Virginia             Fredericksburg
Source: Phar-Mor