Archive for Duane Reade
Walgreens Aquires Duane Reade, Is it DR Delish?
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This press release from Walgreens announcing the acquisition of the iconic New York drugstore Duane Reade is simultaneously surprising and expected. The chain has certainly been troubled over the last few years however recent high level hires and significant Private Brand innovation have seemed to point to Duane Reade’s possible recovery. With this release it appears that all of the positive work helped develop Duane Reade as a valuable acquisition for Walgreens. It will be interesting to see how this evolves and how the newly launched Private Brands at Duane Reade fit into the equation.
Walgreens to Acquire New York-based Drugstore Chain Duane Reade
Walgreen Co. and New York-based drugstore chain Duane Reade Holdings, Inc. today announced a definitive agreement under which Walgreens will acquire Duane Reade from affiliates of Oak Hill Capital Partners in a cash transaction for a total enterprise value of $1.075 billion, which includes the assumption of debt.
The transaction is subject to customary conditions, including receiving regulatory approvals and would include all 257 Duane Reade stores located in the New York City metropolitan area, as well as the corporate office and two distribution centers. Walgreens will fund the purchase with existing cash and anticipates the transaction will close in its current fiscal year, which ends Aug. 31.
“Duane Reade is a compelling strategic acquisition that will immediately provide Walgreens with a leading position in the largest drugstore market in the U.S.,” said Walgreens President and CEO Greg Wasson. “In addition, Duane Reade’s recent initiatives in urban retailing, customer loyalty and private brand products support and accelerate Walgreens strategy to enhance the customer experience in our network of more than 7,100 stores across the country.”
Duane Reade had unaudited net sales of $1.8 billion for the latest 12-month period ending Dec. 26, 2009, and has the highest sales per square foot in the retail drugstore industry nationwide.
“This transaction is consistent with the capital allocation objectives we outlined last fall, which included investing in strategic opportunities that reinforce the company’s core strategies and meet return requirements,” said Wasson. “By combining the strengths of our two companies, we can improve our position as the most convenient provider of consumer goods and services, and pharmacy, health and wellness services in the country.”
The company anticipates the transaction to be dilutive to earnings per share in the first 12 months after closing, and accretive in the next 12 months and beyond. Walgreens expects to achieve synergies between $120-$130 million in the third year after closing the transaction. Additionally, the company will benefit from Duane Reade’s existing net operating losses which will provide additional value over time.
“We are very pleased that this national leader has recognized the successful transformation under way at Duane Reade, which is built upon a 50-year history of serving the needs of New Yorkers and has been supported by our shareholders, including Oak Hill Capital Partners,” said Duane Reade Chairman and CEO John A. Lederer. “We will continue to be the drugstore New Yorkers turn to, just as Walgreens has been a trusted community pharmacy in other markets for more than 100 years.”
Duane Reade will continue to operate under its brand name after the transaction closes. With Walgreens currently operating 70 stores in the New York City metropolitan area, decisions will be made over time as to the best, most effective way to harmonize the Walgreens and Duane Reade brands. Walgreens expects to retain Duane Reade’s store, pharmacy and distribution center employees and many members of Duane Reade’s senior management team following the acquisition. Over time, consolidation of core functions at the corporate offices will occur.
Duane Reade, which opened in 1960 and is named after its first store located on Broadway between Duane and Reade streets in Manhattan, is the largest drugstore chain in the New York City metropolitan area. Over the past two years, Duane Reade has embarked upon a significant brand transformation initiative based upon extensive market research. Improvements include: dramatic new store designs with wide aisles and contemporary décor; a much improved pharmacy featuring lower service counters for more personalized patient interaction; introduction of “Doctor on Premises” walk-in health care; and a store-within-a-store prestige beauty concept called “Look Boutique,” which elevates the merchandising of cosmetics and skin care products and features many prestige beauty brands. Positive changes also include the launch of a family of exciting new private brands including food and beverage brand DR Delish™; and a much expanded customer loyalty program called FlexRewards™.
To date, Duane Reade has opened or converted 30 stores to the new format and has plans for up to 30 more new or remodeled stores in 2010. The continued rollout of “Look Boutique” is also planned for a growing number of stores across the network.
Duane Reade’s transformation initiatives correspond to Walgreens current Customer Centric Retailing (CCR) initiative to reinvent the shopping experience. To date, CCR has been implemented in more than 600 Walgreens stores nationwide, with plans to have as many as 3,000 stores converted by the end of fall 2010.
Lederer said, “We are pleased that Walgreens shares our commitment to finding new and innovative ways to serve local communities, and we look forward to seeing our customers benefit from Walgreens unparalleled pharmacy and operational expertise as we continue with our ongoing transformation.” Duane Reade plans to continue accepting all of its current prescription insurance plans after the transaction closes.
Walgreens will host a public conference call/webcast today at 8:30 a.m. eastern time, during which Walgreens executive management will discuss the acquisition. Speaking on behalf of Walgreens will be President and CEO Greg Wasson and Executive Vice President and CFO Wade Miquelon. Speaking on behalf of Duane Reade will be Chairman and CEO John A. Lederer. A question and answer session with analysts and investors will follow. The live audio webcast will be available at http://investor.walgreens.com.
A rebroadcast will be available from 11:30 eastern time today through Feb. 26 at 888-203-1112 or 719-457-0820, using passcode 5104299.
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Private Brand, Firefighters & A Cup Of Joe.
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As a part of the continued growth of DR Delish the new Private Brand from o the New York based drugstore Duane Reade four-premium coffee blends have been added to the line. Morning Rush, Fire Fighter’s Joe, Polo Grounds Decaffeinated and Five Points Imperial Blend, are made from 100 percent Arabica beans. Each variety was grown at high altitude and picked within the current year to guarantee the finest quality beans.
As a part of the launch of the new coffee’s Duane Reade will make a donation to the New York Police & Fire Widows’ and Children’s Benefit Fund with the sale of each coffee through November 15. Duane Reade has pledged with a minimum donation of $10,000 for the year. Tying Private Brand sales with charitable giving is a excellent way to engage the customer and help the community, national brands (think Yoplait’s pink lids for breast cancer) have used this tactic for years it is nice to see a retailer embrace it.
Private Brand is Front Page News At Duane Reade
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The ubiquitous New York drug retailer Duane Reade has been featured here on a number of occasions over the last few months and I admit to a certain fondness for this David fighting off the Goliaths of drug retail that are quickly invading New York. However it is more on principle than reality, I have visited many of their stores over the last few years and the redesigned stores are a great improvement from many of the classic shoebox city stores that they are known for. So I am excited to see the progress they have made with both their retail experience and their brand. They are uniquely New York and seem to have taken that to heart in their new branding efforts. This reinforces Duane Reade’s brand mantra of New York Living Made Easy.
Duane Reade has long been the place where New Yorkers could find everything from prescriptions to potato chips. So it’s only fitting that the city’s largest drugstore chain, now undergoing a substantial transformation, is introducing hundreds of new Private Brand products and featuring them in the new magalog, The Duane Reader. This is a tried and true Private Brand promotional tactic that retailers including Trader Joe’s and Loblaws have implemented with great success.
Hundreds of new products will appear in the inaugural 20-page Holiday Edition, which will be inserted this week in The New York Times and The Daily News, as well as handed out on commuter trains and in office buildings throughout the city. As well as in the more than 250 Duane Reade stores in the metropolitan area.
According to a Duane Reade press release: Joe Jackman, acting chief marketing officer, commented, “The Duane Reader represents our most recent effort to strengthen our brand image in order to match the positive changes that we are making to our customer experience. It’s our hope that busy New Yorkers will find it to be a relevant, useful, and entertaining companion for city-living during the holidays.”
The Duane Reader spotlights hundreds of products at hot introductory prices. It also profiles exciting new – and New York-centric. Many of the products highlighted make their debut under one of the exclusive Duane Reade Private Brands:
- the expanding DR Delish Private Brand of delectable food and beverage items
- Apt 5, Duane Reade’s quintessential New York Private Brand, which now includes a new environmentally friendly line-up called Apt 5 Goes Green
- the beautiful new beauty Private Brand Look NY, and
- the long-standing and recently relaunched Christmas In New York Private Brand.
“Virtually all the products in The Duane Reader have a connection to city living, with many created especially for the joyous holiday season,” said Joe Magnacca, chief merchandising officer at Duane Reade. “We are thrilled to use this unique publication to highlight the great values and wonderful array of new and exciting products that our team has been busy creating. Whether stocking-stuffer gifts, easy entertaining, or quality food choices on-the-run, we had fun tying in these items to the everyday events and happenings that we experience as we get ready for the holidays in New York.”
The premier issue of the Duane Reader, which debuts this week, focuses on the holiday season, with a number of new and relevant items for entertaining (DR Delish French sparkling sodas), decorating (Christmas in New York cards, wreaths and apartment-sized trees), stocking-stuffing (Apt. 5 corkscrews and LookNY make-up brushes), and just plain New York “survival” items (sheer hosiery, vitamins, stain removal sticks and ‘green’ cleaning supplies).
Accompanying the perfect-for-holiday items is a pull-out Holiday Planner providing a New Yorker’s view of things to see and do this month and next, and other sections with fun tidbits such as which restaurants are serving Christmas dinner, and the hours of the Central Park Ice Rink.
In addition to the exciting product news, The Duane Reader publication is packed with bargains, useful tips and hints, historical notes about New York City, and holiday ideas. It is a must-read for city dwellers and visitors.
DR Delish Takes Over New York
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In a follow up to yesterdays post on the New York drug chain Duane Reade the following interview from Brandweek discusses the changes at Duane Reade and it’s new Private Brand with acting chief marketing officer Joe Jackman.
It sounds like they have exciting plans for both their retail brand and their Private Brands. With the introduction of DR Delish they have eliminated the dated 5th Avenue Private Brand and solved for food but their core health and beauty business still remains to be seen. Can a redesigned Duane Reade – DR (could those initials be better for a HBC brand) be far behind – perhaps with a very New York minimalist Kiehls feel to it?
Here is an excerpt from the interview:
Brandweek: What made Duane Reade decide to launch its own private label brand? Where did the insight for the idea come from?
Joe Jackman: For the last year and a half, we’ve been doing a lot of research with customers. You might call a lot of it formal research—both quantitative and qualitative—and a lot of it was informal research, in the sense that we reached out to consumers in stores, in some cases asking for things that they were concerned about and wanted to see us offer, and they told us, “We’re looking for healthier products” and “We’re looking for tastier products that we feel are more interesting and present great value.” And so, we took a hard look at the products we have under our own labels and we said, “There is something we can do about that.” We’ve been reaching out to the vendor community and finding there is just a terrific interest in working with us, partly because we serve the needs of New Yorkers on a day-to-day basis and also, New York is an amazing place to launch new ideas and so, we’ve been busy working on products that satisfy those needs that consumers told us [they’re concerned about], which are healthier, tastier products, and ones that are interesting and offer great value.
BW: How did DR Delish test with consumers? Did you test market it in stores before announcing its metropolitan launch?
JJ: We had a number of different brands in the past. They could be anything from DR, our private label brand, and some that were under a range of names previously, but which we’ve decided to consolidate under a much more exciting brand called DR Delish. We think the name says it all and so, this is a new brand that we just launched this past Saturday and today, it’s 25 items. By the holidays, it will be many, many more. Our focus was really on snacks and beverages and making them healthier. In some cases, [that included] things like gluten-free, no trans fat, reduced calories, natural ingredients—the areas or things we really focused on in our sampling with various customers and also ones that work inside our own business. There is a whole community of New Yorkers that work within the business. The feedback has been very positive. We did not pre-launch [in test markets.] We believe that New Yorkers/our customers will vote with their pocketbooks. And if we’ve got a winner, we will know whom they are and if we’ve got someone we need to work on a little more, we’ll work on that.
