Walgreens to buy 11 Hi-Schools, launches Hispanic Web site

Drug Store News, Sept 8, 2003

DEERFIELD, Ill. -- Looking to bolster its presence in the Northwest, Walgreens announced yesterday that it plans to acquire 11 Hi-School Pharmacy locations in Portland, Ore., and Vancouver, Wash., and the prescription files for five additional Hi-School locations. Terms of the deal were not disclosed.

"Acquisitions are very rare for us," stated Walgreens chairman, and chief executive officer David Bernauer. "But Steve's [Oliva] operation presents a wonderful opportunity to strengthen our position in a high-growth market."

The chain last made a significant acquisition when it bought the 66-store chain MediMarts in 1986. The Hi-School acquisition does not necessarily represent a shift in new-store strategy, analysts reported. It's probably a way for them to open more stores more quickly because they were getting behind on their store openings," suggested one analyst who tracks Walgreens.

"We will still expand, overwhelmingly by opening our own stores, Walgreens spokesman Michael Polzin told Drug Store News. "This was a unique opportunity and situation that worked out very well-for both us and for Hi-School," he added.

The eleven units being sold will remain open while they are remodeled, beginning in January. Although the typical Hi-School Pharmacy measures approximately 18,000 square feet in selling space, the sales floor of the remodeled locations will be about 14,000 square feet, Polzin said, which more closely resembles Walgreens' prototypical square footage.

After the sale, Hi-School Pharmacy will operate 26 pharmacy/variety stores in Oregon, southwest Washington and California, as well as a distribution center and corporate offices. For now, Hi-School will continue to operate the hardware businesses of those five retail locations where Walgreens is picking up the prescription file. "We will continue to run those locations as Hi-School True Value Hardwares or Hi-School Ace Hardwares, depending on the affiliation that we have in that area,' said Steve Oliva, Hi-School president and chief executive officer.

The remaining Hi-School business is not for sale, Oliva said." "We just purchased a store in June, in Seaside, Ore., Oliva said. "We plan to continue as a small chain in the smaller communities and even expand in those communities."

Walgreens entered the Portland-Vancouver market in 1996 and currently operates 26 stores in that area. In addition to acquiring the Hi-School Pharmacy locations, Walgreens had plans in place to open another new store in Vancouver late last month and two more stores in the market in early 2004.

Se habla espanol

In a separate move, Walgreens announced last month that it has become the first national pharmacy chain to launch a Web site designed specifically for the Hispanic community. The site is located at www.WalgreensEspanol.com.

The Spanish-language site provides drug information, online prescription refills, a store locator and directions on how to use some of the services on www.walgreens.com. Additional services will be added based on user feedback.

With more than 4,000 stores spread throughout 44 states and Puerto Rico, the Deerfield, Ill.-based drug chain saw a great need to cater to the growing Hispanic market.

"Our Puerto Rico stores and other locations that serve Hispanic communities have told us about the need for this kind of resource,' explained Tim McCauley, the director of e-commerce. "It's a great opportunity to extend our online healthcare services to millions of people."

Today, a growing number of retailers are looking for ways to target the Hispanic community. One such retailer is Kmart, which debuted last month its new exclusive Thalia label, a collection of branded women's apparel, accessories and footwear inspired by Latin entertainer Thalia.