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LONGS TARGETS 15 STORE OPENING IN FISCAL 1987 INCLUDING 11 STORES CURRENTLY UNDER CONSTRUCTION; OPENINGS WILL PUT CHAIN OVER 220 STORES BY YEAR-END

Executive Summary

Longs currently has 11 super drug stores under construction and plans to begin work on another four sites, for a total of 15 drug store openings in fiscal 1987, the drug chain noted in its recently released annual report for the fiscal year ended Jan. 30. The scheduled 15 store openings in the current fiscal year will put Longs over 220 stores. The chain opened its 200th drug store in fiscal 1986 and finished the year with 208 stores. As of Jan. 30, the chain had 164 stores in California, 16 in Hawaii, 16 in Arizona, six in Nevada, three in Colorado, two in Alaska and one in Oregon. Longs opened 17 drug stores during the past fiscal year, the annual report notes. The chain reported that its stores "range in size from approximately 15,000 to 40,000 sq. ft., except for three that are older and smaller." Longs added that "stores opened in the last five years averaged approximately 26,000 sq. ft., with 66% being selling space." Longs said it does not have any small format stores lined up for the current year but has several possibilities for next year in the 12,000-20,000 sq. ft. range. The company said it has "adopted a variable format to allow us to go into various locations." Longs said it will continue to finance its expansion "from store operations." Capital spending for fiscal 1986 "totaled $49.4 mil.," Longs stated, "and we project approximately $43 mil. will be spent this year." Discussing its promotional strategy, Longs said it began a six week, chainwide promotion in early February that was tied to the Statue of Liberty restoration project. The chain said the promotion, which "involved over 60 vendors and tripled our television exposure during the course of the program," increased sales 15% for the first week of the promotion. In addition, Longs noted new chainwide Value Book promotions were begun during the past fiscal year. The chain also began testing new merchandising concepts, opening gift and greeting card departments in six of its stores. Longs also commented that it is "re-thinking the overall design and layout of our stores to broaden customer appeal and improve efficiency." Longs reported that it had sales of $1.5 bil. in fiscal 1986, up 8% over the previous year. "Sales of merchandise averaged $7.5 mil. per store for the year," the chain stated. Longs continues to lead the industry in average per-store sales. Net income dropped 7.5% from the previous year to $37.7 mil.

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