Revco moves to build confidence

Drug Store News, May 20, 1996 by James Frederick

TWINSBURG, Ohio-After dodging the second major takeover attempt by rival Rite Aid Corp. in little more than four years, Revco D.S. moved quickly to rebuild its momentum after the deal's collapse.

"Effective immediately, we have re-initiated our aggressive store expansion strategies and are working to rebuild to our pre-Rite Aid momentum," said president and chief executive D. Dwayne Hoven. "Although we have missed out on some real-estate development opportunities while enduring the attempted acquisition, we expect to open at least 100 new and relocated stores in our upcoming fiscal year."

On the financial front, Revco's board announced May 7 that it had authorized the repurchase, from time to time, of up to 3 million shares of Revco common stock on the open market. At the same time, Hoven said he-was comfortable with Wall Street projections that the chain would earn between $1.20 and $1.25 per share for the fiscal year ending June 1.

"All of the qualitites that have made Revco a strong competitor are still intact: our attractive stores, state-of-the-art systems, good-vendor relations, strong distribution network, reputation with customers, and most of all, our resilient Revco people," Hoven said.

Also expressing confidence about Revco's outlook were Sam Zell and Talton Ernbry, co-chairmen of Revco's board and and its biggest stockholders. Following the collapse of the Rite Aid merger plan, the two agreed "Revco will go forward as an independent drug store chain under its present management team," adding, "We believe Revco iS a strong, viable drug store chain.

"As for any attractive alliance opportunities that may arise involving Revco as either a buyer or a seller, our board would consider them as they came along in accordance with its fiduciary responsibility."

Hoven said he would "move immediately to enhance certain financial packages for our people, and hopefully that will preclude anybody wavering from leaving and give people peace of mind."

Revco has already seen the exodus of two financial executives. The chain has promoted Brian Carney to senior vice president of finance and accounting following the departure last month of chief financial officer-Jim Hagan, who left to become senior vice president and chief financial officer of Bruno's Inc. Also resigning was vice president and treasurer Ware Grove.