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FAY's PHARMACY SALES GROWTH BOASTS SECOND QUARTER VOLUME 20.9%

Executive Summary

FAY's PHARMACY SALES GROWTH BOASTS SECOND QUARTER VOLUME 20.9%, to $105.6 mil. for the three month period ended July 31. The chain reports a 38% jump in Rx drug sales for the period. Six month sales climbed 18.5% to $201.4 mil. Net earnings for the Liverpool, New York-based drug chain declined during both periods, however. During the second quarter profits dropped 81.2%, from $2.2 mil. to $417,000. For the first half, earnings fell 70.1%, from $3.6 mil. to $1.1 mil. "The reduction in net earnings was caused by a competitive retail environment resulting in a weakness in gross margins, additional expenses to support the 33 new retail stores, and added financing costs associated with our aggressive expansion efforts," Fay's Chairman Henry Panasci explained. "Our outlook for the balance of the year is further bolstered by the continuing strength of our Rx drug sales, which increased 38% during the second quarter." The company noted that during the quarter it completed the acquisition of eight super drug stores from Genovese, marking the firm's entry into the Hartford, Conn. market. Currently operating 132 drugstores, Fay's said that it expects to open "up to 15 additional stores" before the end of the current fiscal year. Ketchum reported that sales for the first quarter ended July 31 were up 10% over the previous year to $73.5 mil., while net earnings jumped 35.6% to $99,000 from $73,000. In addition, the whslr. noted that net earnings benefited from a $102,000 net operating loss carryforward, making total first quarter fiscal 1986 net income $201,000. Chairman and CEO Harold Altshul attributed Ketchum's improved earnings to "the positive effect of management's continuing cost-reduction efforts." He added that the company's financial position continues to strengthen. "Working capital as of July 31 has increased $1.9 mil. to $14.9 mil.," he noted. "The current ratio at July 31 was 1.46 to one compared with 1.38 to one at April 30." Chart omitted.
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