Posted on 10/30/2001 10:42:06 AM PST by Willie Green
For education and discussion only. Not for commercial use.
PROVIDENCE, R.I. -- CVS Corp. said Tuesday it will close 200 of its pharmacies in January after reporting a 16 percent decline in third-quarter earnings that chairman and chief executive Tom Ryan called "disappointing." Its shares tumbled more than 25 percent by midday.
The nation's largest drug store chain operator also said it will shut down of one of its 10 distribution plants and one of two ProCare mail-order facilities.
At least 220 layoffs will result from the plant and mail-order site closings, and about 100 of its 5,200 Rhode Island employees will also lose their jobs, spokesman Todd Andrews said.
Woonsocket-based CVS reported earnings of $124 million, or 30 cents per diluted share, for the three months ended Sept. 29, a 16 percent drop from $147 million, or 36 cents per share, a year ago.
The results mirrored the consensus estimate of analysts surveyed by Thomson Financial/First Call and are in line with the company's revised earnings forecast of between 30 cents and 32 cents per share that it had issued in September.
But Ryan said the company was disappointed by the latest results.
Wall Street seemed to share that feeling, driving CVS shares down 25.5 percent, or $8.07 a share, to $23.55 by midday on the New York Stock Exchange.
"Clearly, 2001 was a major disappointment for us," Ryan said during a conference call with analysts and reporters. "We understand the problems, they're isolated, and we have plans to fix them."
He blamed the poor showing on a lack of new drug introductions, the growth of the mail-order drug industry and, to a lesser extent, a national shortage of pharmacists.
"I believe the weak economy is certainly a factor" as well, Ryan said.
Sales for the third quarter were $5.4 billion, up 10.1 percent from $4.9 billion during last year's third quarter. Same-store sales rose 7.6 percent for the quarter, with pharmacy same-store sales increasing 11.8 percent.
As part of its reorganization, CVS will close its Henderson, N.C., distribution center, which employs 160, and its mail-order facility in Columbus, Ohio, where 60 people work.
"We will work with those employees to help them find jobs in other CVS facilities," Andrews said.
He said the company will also cut nearly 2 percent of its Rhode Island work force, but did not specify which departments will be targeted. New jobs will also soon be created locally, and there will be no net loss of jobs in the state, Andrews said.
He said the store closings will be distributed throughout all markets in which CVS operates, but specific stores have not yet been announced.
The cost of closing the pharmacies and other facilities will be around $350 million, including severance packages for managers and warehouse staff.
CVS is the nation's largest provider of prescriptions, currently operating more than 4,100 stores in 32 states and the District of Columbia. Despite the store closing, it will remain America's largest drugstore chain.
We can tell when you've been off your meds.
;-)
Maybe, but let's not forget that Americans have been boycotting CVS for pulling funding from the Boy Scouts and publically condemning them.
You can always tell an organization has lousy management, because the good people have left.
You never heard of the FDA?
What do you think prescriptions are all about?
Apparently, some companies are getting prescription drugs to their customers either cheaper or with better customer service. As a result, CVS is closing facilities. This isn't rocket science.
What would Pat do? Raise our taxes to keep inefficient CVS stores open?
I pulled all my prescriptions from CVS for this reason. I hope the boycott had an impact.
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