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Executive Summary

GENOVESE WILL BROADEN ITS NEW YORK CITY PRESENCE IN FY 1987, according to the firm's just released annual report for 1986. "Expansion will continue in fiscal 1987 with the opening of a minimum of six super drug stores in our primary market area," the chain said. During the fiscal year ended Jan. 31, Genovese opened nine stores, eight of which were located within the five boroughs of New York or on Long Island. In addition, the chain sold six stores in northern Connecticut, two in Massachusetts and one in New Jersey. "The stores . . . were sold so that the company could concentrate its efforts in its primary market -- the New York metropolitan area," the report stated. Genovese explained that the more populous New York area offers higher per-store sales as well as the opportunity to use the same advertising expenditures to cover additional outlets. At year end, Genovese operated 75 drugstores, of which 64 were located in New York, seven in Connecticut and four in New Jersey. Average volume per store was $3.2 mil., or $328 per square foot, the chain noted. Having just completed the installation of a pharmacy computer in each of its stores, Genovese continues to emphasize its core drug business. The chain reported that pharmacy sales were approximately $55 mil. in fiscal 1986 and made up 23.7% of the company's $233.2 mil. annual volume. As a percentage of total sales, pharmacy sales were "the highest level in the company's history," the annual report said. Although it posted a 6% volume gain over fiscal 1985, the chain's net earnings plunged 29.2% to $2.9 mil., and included in this figure is a $2.8 mil. gain on the sale of stores and land. "Net income . . . was negatively impacted by the cost of new store openings, the completion of the installation of a pharmacy computer system, the opening of a central warehouse and distribution facility and the institution of the Circle of Values competitive pricing program," the company explained.

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