YOUNGSTOWN Phar-Mor reports quarter losses
Sales were down 16 percent at Phar-Mor stores that remain open.
THE VINDICATOR, YOUNGSTOWN
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Phar-Mor lost $7 million in its most recently completed quarter, partly because of problems in keeping its shelves well-stocked.
The Youngstown-based discount drugstore chain said in a quarterly financial report recently that sales were off dramatically in its second fiscal quarter, which ended Dec. 29.
Total sales were down 42 percent to $199.6 million, but that was mostly because Phar-Mor closed 65 stores after filing for bankruptcy protection in September. At the 74 stores that remain open, sales were down 16 percent to $189.4 million compared with sales in the same quarter a year earlier.
Pharmacy sales at those stores were up 5 percent, but general merchandise sales were down 25 percent.
Reason for decline: The company said sales were down because it was unable to receive all of the merchandise it wanted from suppliers. Company officials have been working to convince suppliers that they will be paid. Because of this problem, Phar-Mor did not advertise in the first two weeks of October.
A company official said last week, however, that relationships with suppliers have improved recently.
The $7 million loss in the second quarter amounted to 65 cents a share. In the same quarter a year earlier, it earned $7.8 million, or 72 cents a share, but needed a one-time gain of $17 million to do it. The gain was related to the early repayment of $34.7 million in debt.
Phar-Mor recorded a net credit of $4.8 million in the second quarter related to its reorganization efforts. Included were a $21.1 million gain on the sale of prescription files. Expenses included $12.4 million in lease rejection costs, $2.6 million in attorney and other professional fees and $593,000 for severance and retention pay.
Phar-Mor has lost $54.7 million in the first half of its fiscal year, compared with a loss of $660,000 in the same period a year earlier.
Phar-Mor is working a plan of reorganization to emerge from bankruptcy court. Last month it received a 180-day extension in order to work out a plan with creditors and file it with the court.