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Self-distribution, closings lift Longs’ numbers

BY Doug Desjardins

WALNUT CREEK, Calif.

Longs Drug reported another three months of strong sales for its second quarter as it generated a 40 percent increase in earnings, continued to open new stores and completed its withdrawal from three states.

Longs reported earnings of $25.7 million for the quarter ended July 26, a total that bettered the average forecast by analysts. Same-store sales inched up 1 percent, and revenue jumped 3 percent to $1.27 billion. Pharmacy same-store sales increased 1.8 percent for the quarter, with pharmacy benefit service revenues from its RX America division increasing 4.7 percent to $79 million.

“In addition to RX America’s growth, we made strong progress in our retail segment by aligning and upgrading our store base and increasing our self-distribution of front-end merchandise,” said Longs chief executive officer Warren Bryant during an Aug. 15 conference call.

He said Longs also produced better margins during the quarter mainly due to a higher volume of generic drug sales and the company’s ability to self-distribute most of its front-end product. Bryant said Longs has “already achieved our goal of self-distributing 80 percent of our front-end merchandise,” a goal it originally planned to reach by the end of the year. It also helped produce a slight 0.7 percent increase on front-end sales for the quarter.

Longs also added eight stores during the quarter and remodeled 11. Bryant said it plans to remodel up to 46 stores in 2007 and added that Longs would be “close to having 50 percent of [its] store base remodeled by the end of the year.” He also said Longs is on track to add 30 to 35 stores this year as part of its most ambitious expansion since the 1990s. The new stores average 20,000 square feet—about 1,500 square feet smaller than its older stores—and include drive-through pharmacies whenever space allows.

Another development was the completion of its exit from three states in the western United States that began in March. Longs closed 23 stores in Oregon, Washington and Colorado, noting that it had no long-term plans for those states and wanted to focus on such core states as California, Nevada and Hawaii. Longs also swapped six of the stores slated for closure with Rite Aid for six of its stores in Reno, Nev., in a deal that was completed in May.

The closings also put Longs back below the 500-store plateau it eclipsed for the first time earlier this year. Longs now has 492 stores, but it should pass the 500-store mark once again this fall with planned store openings.

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Jeffrey Dunn joins American Greetings’ board

BY Doug Desjardins

CLEVELAND American Greetings has appointed Jeffrey Dunn to its board of directors where he’ll fill a vacancy for a term set to expire in 2008. Dunn most recently served as president of Nickelodeon Film Enterprises and as chief operating officer of Nickelodeon Networks Group.

“We are delighted to have Jeff join us,” said chief executive officer Zev Weiss. “American Greetings will benefit from his business acumen and expertise, particularly with regard to digital content and licensing.” Dunn graduated from Harvard and went on to earn an MBA from Harvard Business School.

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FujiFilm Offers Pre-Paid Mailers

BY Doug Desjardins

VALHALLA, N.Y. FujiFilm has debuted pre-paid mailers that make it easier for customers to have their film processed and delivered to their homes. The new program allows customers to buy the pre-paid mailers when they purchase their Fuji film or single-use camera.

“This program offers the consumer value and convenience,” said Rafi Haqqani, senior product manager for one-time-use cameras for Fujifilm. “It brings quality Fujicolor processing right to the consumers’ doorstep with easy-to-use postage-paid mailers.”

The suggested retail price for the pre-paid film mailer is $15.99 and the pre-paid single-use camera mailer is $17.99. Prints come in the standard 4 x 6 size and are mailed back in 7-10 days.

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