Perry returns to black in period.
Perry returns to black in period
PONTIAC, Mich. - Perry Drug Stores, having implemented a number of cost-cutting measures, pushed its way back into the black during the first quarter of fiscal 1991.
The Midwestern chain had net earnings of $1.46 million over the three months ended January 31, after plunging into the red during the final reporting period of fiscal 1990. The fourth quarter loss and stagnant sales prompted Perry to initiate an operational restructuring program that was designed to reduce the administrative staff by 10% and produce savings of some $5 million this fiscal year.
While the steps saved $1.5 million in administrative costs in the quarter just ended, the new fiscal year also brought several sour financial notes. From an operating standpoint last year's first quarter produced after-tax profits of $3.03 million, 51.8% more than the chain earned this year. Nevertheless, the effect of a $6.8 million extraordinary charge, reflecting a different inventory accounting method, gave Perry a $3.77 million net loss for the prior-year period.
Sales continued to be soft, dipping 4.4% to $171.2 million from $179.1 million a year earlier. The chain cites flat same-store results, as well as the lack of contributions from the high-volume A.L. Price deep-discount store operation that was sold late last year.
These low-margin units "have since been replaced with acquired or newly opened stores that initially have lower volume, but greater profit potential," notes chairman Jack Robinson.
"We are pleased that we succeeded in a quick turnaround from the fourth quarter and are encouraged by our results."
Part of Robinson's optimism stems from a 24.6% jump in prescription revenues. This key category is being lifted by the chainwide implementation of the PerryLink pharmacy computer system and a new ad campaign touting the retailer's "Redcoat" pharmacists as well as 24-hour operations in 46 stores. (Prescription drugs now represent 40% of all corporate volume.)
"We are the only drug store chain in Michigan that operates drug stores around-the-clock, and these stores make exceptional contributions to sales and earnings," Robinson says.