Drug Fair reported higher profits yesterday for the second quarter in a row, and President Milton Elsberg told stockholders the company is completing a turnaround started two years ago.
"We may not be free of our problems," Elsberg said at Drug Fair's annual meeting. "Nevertheless, we are cautiously optimisitc that our strong recovery is proceeding according to plan."
As part of the plan, Drug Fair remodeled dozens of stores and launched a more aggressive advertising and marketing strategy. In March, Drug Fair's Wrangler Wranch jeans shops and Scoops ice cream parlors were closed after those diversification efforts proved unprofitable.
Drug Fair's earnings for the 13 weeks ended Arpil 30 jumped 160 percent to $299,000 (18 cents a share) from $115,000 (7 cents) in the same period a year ago.
Sales for the quarter were up 7.5 percent to $67.4 million from $62.7 million.
At the end of last year, Drug Fair set up a reserve of about $1 million to cover losses from discontinued operations, so the closings of the jeans shops and ice cream stores didn't depress this quarter's profits.
"The most encouraging aspect of our performance," is that "our recovery is taking place during a recession that has hit retailers particularly hard," Elsberg told stockholders.
The recession will slow Drug Fair's expansion plans, but the chain still will open eight more stores in the next nine months, the chief executive said.