YOUNGSTOWN If Phar-Mor buys chain, it will hire

Drug Emporium allows Phar-Mor to review its finances as Phar-Mor studies an offer.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Phar-Mor plans to add about 125 jobs to its Austintown warehouse and about a dozen to its headquarters downtown if it buys another Ohio-based drugstore chain.
John Ficarro, Phar-Mor senior vice president, said the hourly warehouse workers would be needed to supply between 70 and 80 Drug Emporium stores that Phar-Mor hopes to acquire. The additional jobs at headquarters would be in accounting and other administrative functions.
Phar-Mor has about 225 workers downtown and about 300 at the Tamco distribution center.
A long shot: Despite these preliminary plans, pulling off the acquisition is still a long shot because Drug Emporium already has a deal with a Minnesota-based chain, Ficarro said.
Phar-Mor's chances improved Thursday as the companies signed an agreement to let Phar-Mor review Drug Emporium's financial records.
Phar-Mor is trying to determine whether it can beat the offer made by Snyder's Drug Stores of Minnetonka, Minn.
Snyder's plans to buy 80 of Drug Emporium's 131 stores for about $25 million and pay a significant part of the chain's debts. Drug Emporium, which is operating under protection of U.S. Bankruptcy Court in Youngstown, intends to close the other stores.
Ficarro said many of Drug Emporium's stores would fit well into Phar-Mor, which has 139 stores in 24 states.
Same markets: Based in suburban Columbus, Drug Emporium has stores in some markets that Phar-Mor serves, such as Philadelphia, Columbus and Dayton, but few of the stores are close enough to be direct competitors. Perhaps only six stores would have to be closed if the deal went through, Ficarro said.
Phar-Mor could add stores in these markets without adding much in overhead costs, such as advertising and field supervisors, he said.
New markets: Drug Emporium also has strong presence in some nearby markets that Phar-Mor hasn't entered, such as Buffalo and Detroit.
In these areas, buying Drug Emporium would give Phar-Mor a large number of stores in those markets immediately without the expense of building them from scratch, Ficarro said.
Overall, a Drug Emporium deal would add more than $500 million in sales to Phar-Mor, which has about $1.3 billion in annual sales now.
Ficarro said Phar-Mor officials are talking to bankers about borrowing money for the possible deal.
Ficarro said he didn't know how long it would take Phar-Mor to decide whether to make an offer for Drug Emporium because he wasn't sure how quickly it will be able to review the company's records.
Losing money: Drug Emporium has been losing money, but Ficarro said Phar-Mor thinks it can operate 70 or 80 of its stores profitably. Drug Emporium was hurt by an investment in Internet retailing that didn't pay off, he said. Also, Phar-Mor could run the stores with between $10 million and $15 million less in overhead expenses, he said.
Drug Emporium lost $8.7 million in its third quarter, which ended Nov. 25. It lost $28 million in its most recently completed fiscal year. Phar-Mor has lost money in six of its last 10 quarters.