Snyder's Drug files for bankruptcy

Financial woes lead to concerns about a local warehouse.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Once seen as the savior of Phar-Mor's dying operations, Snyder's Drug Stores of Minnesota has filed for bankruptcy protection.
The filing Friday in U.S. Bankruptcy Court in Youngstown calls into question the future of the former Tamco Distribution Center in Austintown, which Snyder's took over last year after Phar-Mor closed its stores and the warehouse.
Most of the products shipped from the warehouse, now called Western Wholesale Distribution, go to Drug Emporium stores, which are owned by Snyder's. The Minnesota retailer said it intends to sell or close Drug Emporium.
"That would be devastating to the warehouse," said Bob Bernat, secretary-treasurer of Teamsters Local 377, which represents workers there.
Company officials haven't told the union exactly what to expect, however.
Stores to stay open
The company intends to keep open its stores that operate as Snyders Drug. Bernat said the warehouse ships some products to those stores, but they are smaller, neighborhood pharmacies that don't have as much inventory as Drug Emporium stores.
Snyder's officials couldn't be reached for comment on the warehouse.
The union has 70 members working at the warehouse, with 43 laid off.
Snyder's said last year that it intended to employ close to 200 at the warehouse when it signed a 10-year lease for the facility with Pittsburgh-based Giant Eagle. When Phar-Mor operated the warehouse in recent years, it employed about 250.
Area community leaders had hoped Snyder's also would be successful in its attempt to buy Phar-Mor last year and keep its stores open. Snyder's wasn't successful, however, and Phar-Mor was liquidated.
Drug Emporium
In 2001, Snyder's bought the money-losing Drug Emporium chain, which had filed for bankruptcy protection.
Gordon Barker, Snyder's president, said in a news release that the company spent money to upgrade Drug Emporium, but its performance didn't improve.
The company operates 78 Drug Emporium stores in nine states, including Ohio. They will continue to operate until sales or closings are announced.
Snyder's said recently that it had intended to open a Drug Emporium in Austintown.
After leaving behind Drug Emporium, Snyder's will emerge as a stronger, better-capitalized company that will be looking to grow, Barker said.
Reorganization planned
Snyder's filed for protection from creditors under Chapter 11 of the federal bankruptcy code, which allows it time to reorganize its finances.
Snyder's said its principal lender has agreed to provide financing to continue operations at its 78 corporate stores. There also are 53 independent stores, including some in West Virginia, that aren't involved in the bankruptcy. Snyder's is owned by the Katz Group of Canada.
shilling@vindy.com