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PHAR-MOR CLOSING 58 STORES AS PART OF REVISED BUSINESS PLAN

This article was originally published in The Tan Sheet

Executive Summary

PHAR-MOR CLOSING 58 STORES AS PART OF REVISED BUSINESS PLAN to be presented to creditors in early May, Phar-Mor reported April 16. Eight additional stores may close pending the outcome of negotiations with the landlords, the company said. Phar-Mor's revised business plan will include "completion of its store consolidation program, reorganization of its corporate overhead and distribution functions, investment in information and distribution technology, and improvements in its merchandising and marketing approach," Phar-Mor outlined. The Youngstown, Ohio-based deep discount retail chain expects the most recently announced closings to be its last. Including the 58 definite closings, Phar-Mor has shut down a total of 144 stores since filing for Chapter 11 in August after uncovering a fraud and embezzlement scheme by previous management. A total of 166 "established, geographically-concentrated, profitable deep discount drug stores" will remain after the upcoming shut-downs, the company said. The closings are expected to reduce Phar-Mor's corporate overhead and distribution costs by approximately 30%, the company reported. The downsizing will affect approximately 522 corporate, distribution and field support personnel as well as 3,600 full- and part-time employees. Phar-Mor based its decision to close stores on profitability, growth potential, strength of market position, location and performance. The stores will continue normal operations until bankruptcy court approves closings, at which time they will begin "Going Out of Business" sales. A hearing before the bankruptcy court is scheduled for May 4. Since filing for bankruptcy, Phar-Mor has increased liquidity to about $ 208 mil. in cash as of April 14 from approximately $ 50 mil. in August. Additional progress noted by the company includes setting up a $ 150 mil. credit facility, maintaining a "normal" flow of goods, reducing operating losses and changing top management to include Chairman David Shapira, CEO Antonio Alvarez and President and Chief Operating Officer David Schwartz.
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