Taylor's warehousing to close, Cardinal is signed

Drug Store News, Nov 19, 1990 by Susan Ball

Taylor's warehousing to close, Cardinal is signed

LOUISVILLE, Ky. - Taylor Drug is discontinuing its warehouse operations and instead will use Cardinal Distribution as its primary supplier of pharmaceuticals, H&BAs, OTCs and general merchandise.

The move is another step in Taylor's strategic plan to control expenses and focus on "running the business," said Sam Boulton, Taylor's president. The chain recently sold eight stores scattered throughout Kentucky to Rite Aid, with the stated aim of fortifying its core of 43 stores in this market.

The decision was taken after analysis of a study Deloitte-Touche did for Taylor of the chain's structural and warehousing costs, Boulton's explained.

"We're entering into a partnership with Cardinal. We'll be using their buying power but will keep our buying staff and continue to see our suppliers. Our goods will be distributed through their warehouse operation," he said, indicating that distribution through Taylor's 80,000-square-foot warehouse will wind down by mid-January.

Boulton said Taylor has no plans to close or sell any more stores and emphasized, "The company is not for sale."

The deal marks the first store-door arrangement for Cardinal, said David Bearman, Cardinal's cfo. "It's a meaningful effort to test whether a wholesaler can provide the support services for a medium-sized chain," he said.

The arrangement also will bring Cardinal about $60 million in added business, it is estimated. Taylor's annual sales volume is in excess of $100 million.

In an announcement of the agreement, Cardinal chairman and ceo Robert D. Walter commented, "The new relationship [with Taylor] highlights the inventory savings and innovative distribution services we can offer to our customers and allows Taylor management to focus attention and resources on the continued expansion of their retail operations."

Alco Health Services (the Kauffman-Lattimer group) had formerly supplied most of Taylor's pharmaceuticals, and R. David Yost, Alco group president, central region, said, "We're sorry to see them go." However, he added, "No one customer ever represents enough of our business that it hurts. It will have no impact on that regional business."

Boulton said Taylor is looking to lease or sell the warehouse property, which is owned by the family through T&H Corp.

Both Boulton and Bearman said Cardinal is considering the feasibility of using a part of the warehouse as a distribution depot.

However, Taylor will be supplied mainly from Cardinal's Zanesville, Ohio, warehouse, with pharmaceuticals to be delivered four or five times a week and H&BA, OTCs and other orders about two times a week.