Big B sees past lower profits to expansion

Drug Store News, June 18, 1990

Big B sees past lower profits to expansion

BIRMINGHAM, Ala. -- Big B is working to reverse a decline in profits while it pushes ahead with plans to open another 10 stores and expand its distribution center by the end of the year.

The chain has already opened new units this year in Smyrna, Ga., Chattanooga, Tenn., and Birmingham, and in the spring opened its 300th drug store in Stone Mountain, Ga. In addition, Big B is nearly doubling the capacity of its distribution center near headquarters, from 240,000 square feet to 440,000 square feet, to support its growing store base.

When completed in the fall, the enlarged warehouse will feature state-of-the-art conveyor and picking systems, and will support more than 500 stores, the company announced at its annual shareholders' meeting here May 29.

Still integrating

However, Big B has yet to completely integrate the 85 former Reed drug stores in Atlanta and Columbus, Ga., which it purchased from Peoples Drug Stores early last year--or to turn those stores into profitable contributors to the corporate bottom line. Financing costs and operating losses related to those stores were the primary culprit behind a big drop in net earnings for the first quarter, Big B announced at the meeting.

For the quarter ended May 12, net income plummeted to $395,000 from $2.25 million in the first quarter of the previous year, despite a sales hike of 16.3 percent, to $122.9 million.