PHAR-MOR Noncash charges inflate store's quarterly losses

The drugstore chain records its fifth straight money-losing year.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Phar-Mor posted a $44.5 million loss in the quarter ending June 30, mostly in accounting charges related to money spent on improving stores, making stock buys and other options.
These noncash charges amounted to $37.2 million, Phar-Mor said Monday.
Part of these charges was a write-down needed because the value of some assets has been reduced, including $12.3 million in furniture, fixtures and other store improvements.
The company took an $11 million charge under goodwill, which is an accounting term that covers the company's nonphysical assets, such as reputation and name recognition. Phar-Mor said this charge was taken because of operating losses suffered at some stores in the past and future operating loss projections.
Part of the charge also was taken to cover a $4.2 million loss related to the company's investment in Avatex. The Dallas-based holding company is operated by Abbey Butler and Melvyn Estrin, who are co-chariman and co-chief executives of Avatex and Phar-Mor.
Youngstown-based Phar-Mor has filed for Chapter 11 bankruptcy protection and is closing 65 of its 139 stores.
Losses reported: The quarterly loss reported Monday led to Phar-Mor's fifth straight money-losing fiscal year. For the year that ended June 30, it lost of $48.8 million, or $4.48 a share. It lost $11 million in the previous fiscal year.
For the quarter, sales were $290.3 million, compared with $315.2 million in the same quarter last year. Sales at stores open at least a year were down about 8 percent.
For the fiscal year, sales were $1.24 billion, compared with $1.29 billion in the previous fiscal year. Sales at stores open at least a year were down about 4 percent.
Phar-Mor is trying to reorganize its operations and recently sold pharmacy prescription files at 64 stores for $23.5 million and the pharmacy inventory at those stores for about $10 million. The remaining inventory at the stores being closed was sold for about $32 million, or about 65 percent of cost.
shilling@vindy.com