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The Largo drugstore chain plans to build 60 stores there by 2004 in its first expansion west of Texas.
By MARK ALBRIGHT, Times Staff Writer
© St. Petersburg Times, published April 16, 2002
LARGO -- Eckerd Drug will try to elbow its way into a new market, building a presence from scratch in Arizona.
Eckerd plans to have a total of 60 stores in the Phoenix and Tucson areas by 2004. That's about half as many as Eckerd operates in the Tampa Bay market. Currently, Eckerd does not operate west of Texas.
The move into Eckerd's 21st state is a departure from the Largo chain's decades-old strategy of growing by acquisition.
It's also the first visible sign that the nation's fourth-largest drugstore chain, which fell into a deep profit slump after being merged with J.C. Penney Co.'s Thrift Drugs five years ago, is gearing up to build stores again on a pace with larger rivals.
Eckerd has been pouring virtually all of its construction budget into its 2,600 existing stores, relocating them from strip malls to stand-alone locations or remodeling them to a more profitable new look. But Eckerd chairman and chief executive Wayne Harris, whom Penney hired to turn the chain around, slowed the pace of relocations to 65 this year, from as many as 200 a year, while opening 65 stores in neighborhoods with no Eckerd presence.
Harris has concentrated on cosmetic store remodelings to produce a more profitable formula. Those remodelings will not be completed chainwide for another two years.
Meantime, rival Walgreens, which operates in twice as many states, has been opening 450 to 500 stores a year, keeping the pressure on Eckerd to expand.
"We need to be doing 240 to 250 a year," Harris said recently. "We'll be adding over 200 stores in 2003 and 240 in 2004."
Phoenix is the nation's 12th largest drugstore market, and Tucson is the 76th. Walgreens controls 61 percent of the Phoenix market and 48 percent of the Tucson market. Osco Drug is a distant second with less than 20 percent. Combined, the region had annual drugstore sales of $2.6-billion in 2001.
"Arizona has been slower to develop as a retirement market than Florida," said Jeff Walden, executive editor of Chain Drug Review. "With aging baby boomers, everybody today wants to be in the big retirement markets."
It will be the first time Eckerd expanded into a new state since 1999, when the purchase of Genovese Drug Stores Inc. included stores in Connecticut.
Harris, the Eckerd CEO, was well-paid in his first full year as head of the chain. The annual proxy statement recently filed by parent company Penney reveals Harris was paid $2.16-million, including salary and incentive bonuses of $1.26-million. He also was granted options to buy 150,000 shares of Penney stock.
-- Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.