NEW YORK JC Penney said Monday that it has agreed to sell its Eckerd drugstore operations for a total of more than $4.5 billion in cash to the Jean Coutu Group and CVS. Closing of the transactions, which are subject to approvals, is anticipated to occur by the end of the fiscal second quarter.
Canadian-based Jean Coutu Group will acquire about 1,540 Eckerd drugstores and support facilities located in 13 Northeast and mid-Atlantic states, as well as the Eckerd home office in Florida, for $2.37 billion. In the U.S., Coutu currently operates the 330-store Brooks Pharmacy chain in New England.
CVS will acquire 1,260 Eckerd drugstores and support facilities located in the remaining southern states, principally Florida and Texas, and Eckerd's pharmacy benefits management and mail order businesses, for $2.15 billion. The Woonsocket, R.I.-based chain has almost 4,200 stores in 33 states and Washington, D.C.
"I believe the sale of Eckerd will allow both JC Penney and Eckerd to maximize their potential," Allen Questrom, chairman and chief executive of JC Penney in Plano, Texas, said in a statement. "This sale will allow JC Penney to focus entirely on our core department store and catalog/Internet business."
Questrom said that the company's core business has made "tremendous progress over the past three years, with significant improvement in both sales and operating profit, and we remain confident we will achieve our operating profit goal of 6-8 percent of sales in 2005. Going forward, our financing strategy will remain focused on preserving both strong liquidity and financial flexibility as we work to improve the performance of our department store and catalog/Internet business."
—Brandweek staff report