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Publicly held drug chains: their five-year track records.

Publicly held drug chains: Their five-year track records

                          Corporate sales (add 000)

Chain                  2007          2006         2005

CVS Caremark (1)     76,329,500   43,821,400   37,006,200
(12/29/07)

Drugstore.com (2)       445,723      415,777      399,430
(12/30/07

Duane Reade (3)       1,686,752    1,584,778    1,589,451
(12/29/07)

Jean Coutu (4)       11,675,600   11,143,100    9,617,363
(6/4/07)

Longs (5)             5,262,565    5,097,052    4,670,303
(1/25/07)

Rite Aid (6)         24,326,846   17,399,383   17,270,968
(3/1/08)

Shoppers              8,478,382    7,786,436    7,151,115
Drug Mart (7)
(12/29/07)

Walgreens (8)        53,762,000   47,409,000   42,201,600
(8/31/07)

                       Corporate sales
                          (add 000)

Chain                  2004          2003

CVS Caremark (1)     30,594,300   26,588,000
(12/29/07)

Drugstore.com (2)       360,099      245,733
(12/30/07

Duane Reade (3)       1,598,369    1,465,274
(12/29/07)

Jean Coutu (4)        4,096,138    4,047,563
(6/4/07)

Longs (5)             4,607,873    4,526,524
(1/25/07)

Rite Aid (6)         16,812,439   16,600,449
(3/1/08)

Shoppers              4,723,119    4,415,202
Drug Mart (7)
(12/29/07)

Walgreens (8)        37,508,200   32,505,400
(8/31/07)

                         Net income (loss) (add 000)

Chain                  2007          2006         2005

CVS Caremark (1)      2,637,000    1,368,900    1,224,700
(12/29/07)

Drugstore.com (2)       (9,011)     (13,026)     (20,899)
(12/30/07

Duane Reade (3)        (87,780)     (79,364)    (100,388)
(12/29/07)

Jean Coutu (4)          140,800      103,800      104,378
(6/4/07)

Longs (5)                96,201       74,461       73,887
(1/25/07)

Rite Aid (6)        (1,078,990)       26,826    1,273,006
(3/1/08)

Shoppers                493,628      422,491      364,494
Drug Mart (7)
(12/29/07)

Walgreens (8)         2,041,300    1,750,600    1,559,500
(8/31/07)

                        Net income (loss)
                            (add 000)

Chain                    2004         2003

CVS Caremark (1)        918,800      847,300
(12/29/07)

Drugstore.com (2)      (47,735)     (18,649)
(12/30/07

Duane Reade (3)        (50,724)        5,144
(12/29/07)

Jean Coutu (4)          176,923      160,092
(6/4/07)

Longs (5)                36,560       29,764
(1/25/07)

Rite Aid (6)            302,478       83,379
(3/1/08)

Shoppers                315,870      256,628
Drug Mart (7)
(12/29/07)

Walgreens (8)         1,360,200    1,175,700
(8/31/07)

                                  Net margin (%)

Chain                2007     2006     2005     2004     2003

CVS Caremark (1)     3.4      3.1      3.3      3.0      3.2
(12/29/07)

Drugstore.com (2)     --       --       --       --       --
(12/30/07

Duane Reade (3)      N/A      N/A      N/A      N/A      0.3
(12/29/07)

Jean Coutu (4)       1.2      0.9      1.1      4.3      4.0
(6/4/07)

Longs (5)            1.8      1.5      1.6      1.9      0.7
(1/25/07)

Rite Aid (6)          --      0.2      7.3      1.8      0.5
(3/1/08)

Shoppers             5.8      5.4      5.1      6.7      5.8
Drug Mart (7)
(12/29/07)

Walgreens (8)        3.8      3.7      3.7      3.6      3.6
(8/31/07)

                                 Gross margin (%)

Chain                2007     2006     2005     2004     2003

CVS Caremark (1)     21.1     26.8     26.8     26.2     25.8
(12/29/07)

Drugstore.com (2)    23.3     21.6    203.0     20.3     20.4
(12/30/07

Duane Reade (3)      30.3     30.0     19.0     19.6     20.3
(12/29/07)

Jean Coutu (4)       N/A      N/A      N/A      N/A      N/A
(6/4/07)

Longs (5)            26.0     25.0     25.7     25.7     25.3
(1/25/07)

Rite Aid (6)         27.3     27.0     27.2     25.0     24.3
(3/1/08)

Shoppers             N/A      N/A      N/A      N/A      N/A
Drug Mart (7)
(12/29/07)

Walgreens (8)        28.4     27.8     27.9     27.2     27.1
(8/31/07)

                                 Current ratio

Chain                2007     2006     2005     2004     2003

CVS Caremark (1)    1.3-1    1.5-1    1.8-1    1.6-1    1.6-1
(12/29/07)

Drugstore.com (2)   1.5-1    1.5-1    1.6-1    1.4-1    1.6-1
(12/30/07

Duane Reade (3)     1.0-1    1.0-1    1.2-1    2.3-1    3.0-1
(12/29/07)

Jean Coutu (4)      1.2-1    1.9-1    1.9-1    2.0-1    1.9-1
(6/4/07)

Longs (5)           1.3-1    1.4-1    1.3-1    1.5-1    1.3-1
(1/25/07)

Rite Aid (6)        1.8-1    1.9-1    1.3-1    1.8-1    2.3-1
(3/1/08)

Shoppers            1.0-1    1.2-1    1.1-1    1.1-1    0.8-1
Drug Mart (7)
(12/29/07)

Walgreens (8)       1.4-1    1.7-1    1.9-1    1.9-1    1.9-1
(8/31/07)

                              Return on investment (%)

Chain                2007      2006     2005     2004     2003

CVS Caremark (1)      8.4      13.8     14.6     13.1     14.1
(12/29/07)

Drugstore.com (2)      --        --       --       --       --
(12/30/07

Duane Reade (3)        --        --       --       --      1.6
(12/29/07)

Jean Coutu (4)        7.4       6.6      7.4     20.7     21.7
(6/4/07)

Longs (5)            11.6       9.1      9.6      5.0      4.2
(1/25/07)

Rite Aid (6)           --       1.6     79.2      9.7      N/A
(3/1/08)

Shoppers             15.9      15.5     15.3     14.6     14.0
Drug Mart (7)
(12/29/07)

Walgreens (8)        18.4      17.3     17.5     16.5     16.3
(8/31/07)

                                   Drug stores

Chain                2007     2006     2005     2004     2003

CVS Caremark (1)    6,301    6,202    5,471    5,375    4,179
(12/29/07)

Drugstore.com (2)      --       --       --       --       --
(12/30/07

Duane Reade (3)       242      248      251      255      241
(12/29/07)

Jean Coutu (4)      2,182    2,185    2,243      655      643
(6/4/07)

Longs (5)             510      509      476      472      470
(1/25/07)

Rite Aid (6)        5,059    3,333    3,323    3,356    3,382
(3/1/08)

Shoppers            1,057      987      950      915      870
Drug Mart (7)
(12/29/07)

Walgreens (8)       5,997    5,461    4,953    4,582    4,227
(8/31/07)

                                    Stocks

                                  Net change    % change
Chain                12/31/07      vs. 2006     vs. 2006

CVS Caremark (1)       39.75        + 8.84       + 28.6
(12/29/07)

Drugstore.com (2)       3.30        - 0.36        - 9.8
(12/30/07

Duane Reade (3)          N/A           N/A          N/A
(12/29/07)

Jean Coutu (4)         11.17        - 2.58       - 18.8
(6/4/07)

Longs (5)              47.00        + 4.62       + 10.9
(1/25/07)

Rite Aid (6)            2.79        - 2.65       - 48.7
(3/1/08)

Shoppers               53.26        + 3.17        + 6.3
Drug Mart (7)
(12/29/07)

Walgreens (8)          38.08        - 7.81       - 17.0
(8/31/07)

All columns represent total operations (drug stores plus other
businesses) with the exception of "Drug stores "which
covers drug units at fiscal year-end. The return on investment
(ROI) is based on year-end stockholders equity. Where applicable,
stock prices have been adjusted to reflect splits. In many cases,
gross margins take into account store occupancy costs, warehousing,
delivery and buying expenses.

* CDR estimate.

N/A = not available.

() = net loss.

(1.) CVS Caremark Corp.'s results for 2007 reflect the March 22,
2007, merger of CVS Corp. and Caremark Rx Inc. Costs associated
with the merger reduced earnings by about $68 million. Results for
2006 reflected the June 2, 2006, acquisition of 701 Sav-on and Osco
freestanding drug stores from Albertsons Inc. Costs associated with
the acquisition reduced earnings by around $102.4 million, which was
partially offset by a onetime credit of about $25.7 million for an
accounting change and an approximate $10 million credit to the income
tax provision for the reversal of previously recorded tax reserves.
Earnings in 2005 reflected benefits of $52.6 million from the
reversal of previously recorded tax reserves, as well as a gain of
about $8.4 million from a litigation settlement. Results for 2004
reflected the acquisition on July 31 of 1,268 Eckerd Corp. stores and
other assets from J.C. Penney Co. Net income for 2004 reflected a $60
million benefit from the reversal of previously recorded tax reserves,
partially offset by a $40.5 million after tax adjustment for the
cumulative effect of an accounting change related to leased
properties. The fiscal 2003 year had 53 weeks. Store count figures
include specialty pharmacies.

(2.) Drugstore.com's 2004 year had 53 weeks and reflected a $27.5
million pretax charge for impairment of goodwill and other intangible
assets.

(3.) Duane Reade Inc. was acquired in July 2004 by Oak Hill Capital
Partners, with the change in ownership resulting in the application
of purchase accounting. All financials for 2004 reflected the
combined results of the successor and predecessor companies.
Effective with the acquisition, the company's stock is no longer
publicly traded. Results for all years prior to 2004 have been
restated to reflect changes in accounting for leases as well as in
the reporting of revenues from resales of certain retail inventory.
In 2007 the company changed its accounting for store occupancy
costs, moving them from cost of sales to SG&A expenses. As a
result, gross margins for 2007 and 2006 have been restated to reflect
this change. The net loss for 2007 reflects the following pretax
items: $4.35 million in closed-store costs, $868,000 in asset
impairment charges, $2.25 million in costs for an accounting
investigation, $6.01 million in special costs related to the former
CEO and $1.22 million in other special expenses, partially offset by
a $1.34 million gain on the sale of pharmacy files. The net loss in
2006 reflected the following pretax items: $10.2 million in asset
impairment charges, an $835,000 charge for an accounting
investigation, $1.2 million in special costs related to the former
CEO and $1.18 million in other special costs, offset by an $18
million credit related to previously recorded labor contingency
expenses. The net loss for 2005 reflected a $16.6 million charge for
the impairment of intangibles, $13.1 million in costs related to
the former chairman's employee contract and severance-related
expenses, $4.4 million in labor contingency expenses and a $21.6
million year-over-year increase in depreciation and amortization
expenses due to the application of purchase accounting. The net
loss for 2004 reflected $40.6 million in pretax expenses related
to the acquisition, $26.4 million in pretax costs primarily
associated with the termination of the company's obligations in
connection with the chairman's SERP and other expenses from his
employment contract, $7.5 million in pretax costs related to the
refinancing of a term loan, and $4.4 million in pretax charges for
labor contingency expenses associated with an NLRB ruling. Results
for 2003 were restated, with net income reflecting a $12.6 million
pretax provision for labor contingency expenses and $644,000 in
pretax expenses related to the Oak Hill acquisition. Earnings for
2003 reflected a $12.6 million pretax provision for the potential
effect of pending labor-related litigation, as well as $644,000
in expenses related to the planned acquisition of the company and
$812,000 in losses related to debt extinguishment.

(4.) The Jean Coutu Group's financial results for all years shown
here have been restated to reflect conversion to United States
currency. Sales include franchise fees and distribution revenues
related to the company's franchise network in Canada, results of
company-owned stores in the U.S. and other revenues. Fiscal 2007
included 53 weeks. On June 4, 2007, the company completed the sale
of its U.S. Brooks Eckerd Pharmacy operations to Rite Aid Corp.,
with Coutu retaining a 31.7% equity interest in Rite Aid. Thus,
all results stated here and other data include the final fiscal year
of the U.S. operations. Net income for fiscal 2007 reflects the
following after-tax items: a $76.6 million gain on the sale of
the U.S. operations, a $105.3 million credit from the reversal of
amortization in the U.S. segment and $200,000 in unrealized gains
on monetary items, partially offset by a $117.5 million loss on
early debt retirement and $31.6 million in restructuring charges.
Net income for 2006 included unrealized foreign exchange losses on
monetary items of $10.9 million, as well as an income tax credit
of $44 million. Results for fiscal 2005 included 43 weeks of
contributions from 1,500-plus Eckerd stores and support facilities
acquired on August 1, 2004. Net income for fiscal 2005 included
a $7.8 million unrealized foreign exchange loss on monetary items,
as well as an income tax credit of $12.6 million. Store totals
include franchised and company-owned Jean Coutu, Brooks and Eckerd
units, as well as PJC Clinic apothecaries.

(5.) Longs Dug Stores' sales for the most recent four years represent
total revenues to include the company's pharmacy benefits management
operations. Gross margin for the most recent four years is for the
company's retail operations only. In February 2007 the company
announced that it would be closing 23 stores in Colorado, Oregon
and Washington, reclassifying those units as discontinued operations.
Accordingly, net income for the 53-week year ended January 31, 2008,
includes a $2.69 million loss from discontinued operations. Income
from continuing operations for the year was $98.9 million, which
includes a $5.1 million after-tax net charge related to the planned
disposition of seven California stores. Earnings for 2006 included
$4.99 million in losses from discontinued operations. Earnings for
continuing operations were $79.5 million and included a $1.4 million
after-tax net charge related to the planned disposition of the seven
California stores. Net income for 2005 included the following
after-tax items: a $6.6 million gain on the sale of a distribution
facility and $5.8 million in positive adjustments to self-insurance
reserves. Earnings in 2004 reflected a $6.7 million charge for legal
settlements, partially offset by $2.8 million in adjustments for
self-insurance reserves. The company's net income for 2003 reflected
the following pretax items: a $7 million gain from legal settlements
and a $3.6 million benefit from the resolution of a vendor pricing
dispute, as well as a $5.5 million provision to increase
self-insurance reserves and a $4.9 million charge for store
closures/asset impairments.

(6.) Rite Aid Corp.'s results for 2007 reflect the June 4, 2007,
acquisition of 1,854 Brooks Eckerd Pharmacy stores from the
Jean Coutu Group. The net loss for 2007 reflects an $802.7 million
noncash income tax charge from the recording of a valuation allowance
against deferred tax assets, as well as the following pretax
items: $154.2 million in acquisition integration expenses, $86.2
million in store-closing and impairment expenses and a $12.9 million
commitment charge for acquisition-related financing, partially offset
by a $3.73 million gain on asset sales. The 2007 net loss also
includes $2.79 million in losses from discontinued operations. In
2006 the company's earnings included the following pretax items:
$49.3 million in closing and impairment charges and an $18.7 million
loss on debt modifications and retirements, partially offset by
$11.1 million in gains on asset sales. Results for 2006 also included
an $11.6 million income tax credit as well as $3.04 million in
losses from discontinued operations.

(7.) All amounts for Shoppers Drug Mart (SDM) are in Canadian
dollars. In fiscal 2005, in compliance with the Canadian Institute
of Chartered Accountants, SDM determined that the drug stores owned
by individual associates are variable interest entities (VIES) whose
results are subject to consolidation within the company's financial
statements. Fiscal 2004 results have been adjusted and restated for
comparative purposes. Net earnings for 2003 reflected special
items related to a refinancing completed in October 2003, including
a $9.52 million charge for the write-off of deferred financing
costs, plus a $1.12 million charge for the termination of currency
derivative agreements.

(8.) Walgreen Co.'s earnings for 2006, 2005, 2004 and 2003 reflected
pretax gains of $7.3 million, $26.3 million, $16.3 million and $29.6
million, respectively, for partial payment of the company's share
of the brand name prescription drug litigation settlement. Fiscal
2006 earnings also reflected a $12.3 million credit for the reversal
of certain previously recorded expenses related to Hurricane
Katrina. Fiscal 2005 earnings reflected $54.7 million in estimated
Katrina-related expenses. Effective with fiscal 2006, store counts
included home health care facilities, specialty pharmacies, clinic
pharmacies and mail service facilities.
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Title Annotation:State of the Industry/The Issues
Publication:Chain Drug Review
Article Type:Financial report
Date:Apr 28, 2008
Words:2791
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