Eckerd speeds closings as earnings increase

Drug Store News, April 3, 1995 by Mike Troy

CLEARWATER, Fla. - Bolstered by record sales and earnings in fiscal 1994, Eckerd Corp. is accelerating the closure of underperforming stores while beefing up its newstore construction program.

The company said it would accelerate its cost-cutting efforts by closing 90 underperforming, geographically dispersed stores during 1995. Those units generated $114 million in sales but tallied operating losses of $5 million last year, Eckerd reported.

Offsetting their closure will be the construction of 90 new stores in 1995, followed by at least 100 new stores in 1996. Among them: the chain's first nine units in Trenton, N.J. The retailer will also continue to search out acquisition opportunities, said Eckerd chairman and chief executive Stewart Turley.

Buoying Eckerd's expansion plans are clear signs that its operating strategy since returning to public ownership in July 1993 is paying off. Sales for the year ended Jan. 28 grew 9.4 percent to $4.49 billion. Net earnings totaled $47.8 million, vs. a net loss the prior year of $2.9 million. Fourth-quarter net earnings before extraordinary items jumped 88 percent to $40.8 million.

Two-year effort

In an interview with Drug Store News, Turley said the year's positive results are due to a two-year effort to invest in Eckerd's business. Among programs that have paid off in higher sales and earnings, he said, were technology upgrades, a bigger commitment to third-party marketing and managed care, new merchandising strategies including the rollout of Food Mart departments, a stronger focus on pharmacy and health care in stores and debt reduction efforts.

"The positive results during 1994 were the continuation of a process that began several years ago, and 1995 will be a continuation of those same processes," Turley said. "Part of it was a recognition that our industry is changing in some dramatic ways, and we wanted to be ahead of the curve."

Eckerd currently operates 1,731 stores and 484 one-hour photo labs.