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Longs completes five-year turnaround

BY Doug Desjardins

Back in February 2002, things were looking bleak for Longs Drug. The venerable 64-year-old chain was coming off another lackluster year and faced growing competition from such larger chains as CVS and Walgreens.

So, faced with antsy shareholders, the Longs’ board of directors cleaned house and eased out most of its top executives over a six-month span. Then it adopted a five-point turnaround plan, set aside $50 million to overhaul its archaic supply chain and brought in new president Warren Bryant from Kroger to spearhead the turnaround.

One of his first orders of business was to come up with a new look for Longs’ aging store base. Most of its stores were big boxes built in the 1970s and 1980s and looked ancient compared with Walgreens sleek new corner lot stores with drive-through windows.

The answer was a concept store dubbed “Total Visual Appeal” with wider aisles, better lighting and a new “racetrack” layout that was user-friendly. The concept was an instant success and is considered the key reason for Longs rebound in sales. Longs has remodeled 48 percent of its store base to date and should have close to 60 percent done by the end of 2008.

Longs’ executive team also has done plenty of work behind the scenes to centralize buying and distribution. At the time Bryant arrived, some stores were still making their own purchases from vendors, a holdover from the old days when store managers were given near total autonomy.

Since then, the chain has centralized its buying and opened a larger distribution center in 2006, which allows the chain to self-distribute most of its general merchandise. The new DC—and a remix of merchandise—has pushed front-end sales from a decline of 6.1 percent in early 2003 to positive gains in 2007 for the first time in nearly a decade.

And it took several new executives to make all this happen. Retail veteran Todd Vasos came on board during the 2002 transition year, and as senior vice president and chief marketing officer, he has helped lead the remodeling effort and remerchandising on the front end.

On the pharmacy side, Longs hired former Duane Reade executive Bruce Schwallie in 2002 as executive vice president of business development and managed care. Schwallie is now leading RX America, Longs’ PBM, through a remarkable growth spurt. It generated $79.7 million in its most recent quarter with PBM revenues jumping 96 percent to $19.1 million compared with just $9.7 million in the same quarter last year.

And since the arrival of Bryant and his team, Longs has topped the 500-store mark for the first time, created a smaller store format with drive-through pharmacies and re-established itself as a regional power-house on the West Coast. And with more than $74 million in earnings for fiscal 2007 and even better prospects for 2008, it appears the turnaround is just about complete.

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Report says Tesco looking at expansion in Chicago

BY Doug Desjardins

CHICAGO Tesco is looking to roll out Fresh & Easy Neighborhood Markets in the Chicago area, according to a report in the Chicago Sun Times.

The newspaper attributed the report to a “knowledgeable source” and said Tesco could offer the Chicago area something “unique because of its strong offering of prepared foods, packaged perishables and selection of produce, meat and bakery.”

Tesco has not commented on the report and has said it plans to expand on the West Coast in 2008, opening stores in California, Nevada and Arizona. The chain opened its first store in December and plans to have up to 50 Fresh & Stores open by the end of February.

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Lubin promoted to Walgreens vp and new second position

BY DSN STAFF

DEERFIELD, Ill. Walgreens today promoted Steven Lubin to divisional vice president and the new position of general manager of marketing for non-mainland operations. In his new role, Lubin will ensure the company’s marketing meets the needs of customers in Puerto Rico and Hawaii.

As general manager of marketing for Puerto Rico, Lubin spent the past three years living on the island. He is relocating back to the company’s Deerfield, Ill., headquarters for his new duties.

“Steve was a huge asset in Puerto Rico as we worked to better meet the unique needs of our island customers,” said Walgreens chairman and chief executive officer Jeffrey Rein. “He also was invaluable as we opened our first Hawaii store last year, quickly grasping what Hawaiian customers want in a drug store and working with a Walgreens team to buy from many local vendors. Steve’s a big part of our early, strong success in Honolulu.”

Lubin joined the company in 1970 as a stock clerk in Chicago while attending college. He managed several Chicago-area stores before moving into Walgreens’ purchasing department in 1980. He was promoted to a divisional merchandise manager in 1988 and to general manager of marketing for Puerto Rico in 2004. 

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