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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) JANUARY 30, 1998
GENOVESE DRUG STORES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
1-7623 11-1556812
(Commission File Number) (I.R.S. Employer Identification No.)
80 MARCUS DRIVE, MELVILLE, NEW YORK 11747
(Address of Principal Executive Offices) (Zip Code)
(516) 420-1900
(Registrant's Telephone Number, Including Area Code)
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ITEM 5. OTHER EVENTS.
This Current Report on Form 8-K is being filed with the
Securities and Exchange Commission by Genovese Drug Stores, Inc. (the "Company")
for the purpose of providing the information set forth in a press release issued
by the Company on January 30, 1998, a copy of which is filed as Exhibit 99.1
hereto and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) Financial Statement of Businesses Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
The following exhibits are filed herewith:
99.1 Press Release dated January 30, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
GENOVESE DRUG STORES, INC.
/s/ Jerome Stengel
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Jerome Stengel
Vice President and Treasurer
Principal Financial Officer
Date: January 30, 1998
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EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
99.1 Press Release dated January 30, 1998.
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EXHIBIT 99.1
[Genovese Letterhead]
COMPANY CONTACT
Jerome Stengel
Vice President & Treasurer
Genovese Drug Stores, Inc.
80 Marcus Drive
Melville, NY 11747
516-845-8211
FOR IMMEDIATE RELEASE
[Metro New York Circuit Coverage]
GENOVESE DRUG STORES ANNOUNCES STRATEGIC RESTRUCTURING
MELVILLE, NEW YORK, January 30, 1998 - In a move designed to enhance
the company's position in the increasingly competitive marketplace, Genovese
Drug Stores, Inc. (AMEX:GDXA), a chain of 135 super drug stores with locations
in New York, New Jersey and Connecticut today announced that its Board of
Directors had approved a comprehensive strategic restructuring plan. The plan
and certain other actions will result in pretax charges of between $12 and $14
million, which will be recorded in the Company's fourth quarter and fiscal year
ending today.
"In implementing this strategic restructuring program, Genovese Drug
Stores is further demonstrating its ongoing commitment to enhance its
competitive position and to improve its growth and earnings prospects and value
to our stockholders," said Chairman and Chief Executive Officer, Leonard
Genovese. "At a time when the entire chain drug store industry is undergoing
dramatic changes and reacting to tightening pharmacy gross margins, these
actions will allow Genovese to strengthen our present position in the
marketplace and invest in our future without compromising our customer service
first policy."
The strategic restructuring includes workforce reductions which will
eliminate approximately 600 positions (within a work force of approximately
5,300 employees) at the Company's headquarters, distribution center and stores,
and the closing or sale of five store locations. A majority of the jobs being
eliminated at store locations are part-time positions.
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The charges related to the restructuring will include provisions for
departure payments, costs associated with the closing of stores and other costs
incurred in connection with the restructuring plan.
While the Company expects to realize significant cost savings from the
payroll reductions, the Company is continuing to analyze both payroll and
non-payroll cost savings opportunities. The Company plans to issue an estimate
of total annualized cost savings together with its fourth quarter and fiscal
year-end financial results in early March.
The Company plans to continue to grow strategically through new store
openings and acquisitions of independent pharmacies. During fiscal 1998 (which
ends today), the Company opened 10 new stores, acquired the prescription files
of nine drug stores and remodeled 12 stores. In the coming fiscal year, the
Company plans to open 10 new stores, remodel 10 stores and continue to acquire
the prescription files of independent pharmacies.
"The strategic restructuring program is an outgrowth of certain
operational changes at the Company which include the increased involvement of
management personnel more directly in store operations and the more effective
use of the Company's technology," said Mr. Genovese. "The Company expects that
these operational changes and the related strategic restructuring will
streamline and improve the efficiency of its operations and reduce operating
costs without impacting the Company's commitment to customer service,
particularly in the pharmacy department, the cornerstone of the Company's
business."
Additionally, the Company announced the retirement of three of its
senior executives, Herbert J. Kett, Vice Chairman of the Company and a member of
its Board of Directors, Jerome Stengel, Vice President, Treasurer and Chief
Financial Officer, and Irwin Livon, Vice President - Merchandising and
Advertising. Mr. Kett will retire effective April 3, 1998 and Messrs. Stengel
and Livon will retire on May 1, 1998. Messrs. Kett, Stengel and Livon have over
75 years of combined experience with the Company. Mr. Kett will be resigning
from the Board of Directors effective April 3, 1998.
Mr. Kett, whose primary responsibilities have been to oversee the
Company's real estate activities and governmental affairs matters, will oversee
a transition of his responsibilities to other members of the Company's executive
staff and the implementation of a new exclusive brokerage relationship which the
Company is announcing today with Garrick-Aug Associates, Inc., a well-known real
estate brokerage firm. Pursuant to this new arrangement, Garrick-Aug will work
with the
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Company in identifying new store locations throughout the New York metropolitan
area.
Mr. Stengel will continue to work with the Company in completing its
year-end financial reporting and in overseeing our banking relationships. Mr.
Stengel will continue to work with the Company's Assistant Vice President and
Controller, Christopher D. Noonan, who will serve as acting Chief Financial
Officer after Mr. Stengel's retirement.
Commenting on the retirements of Herb Kett, Jerry Stengel and Irv
Livon, Mr. Genovese said, "Each of these three executives has been instrumental
in the success of the Company. Herb has been with the Company for 45 years and
Jerry for 25 years. During those years, they helped to guide the Company from a
small, very localized chain of drug stores to what is today one of the largest
super drug store chains in the United States, with over $770 million in sales
for the fiscal year ended today. Irv Livon, who joined the Company seven years
ago, has played a key role in the marketing and advertising areas. The Genovese
family, all of the associates of the Company and the Company's stockholders will
forever owe a debt of gratitude to these outstanding executives for their
leadership, loyalty and commitment."
Mr. Genovese concluded by saying, "We are disappointed that the
Company's fiscal year 1998 results, which, as we previously announced, are
expected to be lower than anticipated, will be adversely impacted even further
by the charges to earnings resulting from the strategic restructuring.
Additionally, as an employee-oriented Company, it was very difficult to make the
necessary staff reductions. The Company believes that the combination of the
financial benefits from the organization changes and the strategic
restructuring, the strength of the Company's franchise and the Company's ongoing
growth plans to continue to open new stores in fiscal year 1999 should enable
the Company to maintain its place as a leader among chain drug stores in the New
York metropolitan area."
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This release contains "forward looking statements" based on the Company's
current plans and expectations, which involve risks and uncertainties. Actual
results or achievements may be materially different. The Company's plans and
expectations are based on assumptions involving judgments with respect to future
economic, competitive and market conditions and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. The Company's plans regarding the ability to
achieve cost-savings is subject to a number of risk factors, including the
ability of the Company to continue its level of customer service and to operate
efficiently with a reduced staff and in a manner that
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does not unduly disrupt business operations. The Company's plans regarding
ongoing growth could be adversely impacted by, among other things, its ability
to locate and open new store locations and by construction delays or delays or
failures to obtain necessary governmental licenses, permits or approvals.
Therefore, there can be no assurance that the forward looking statements will
prove to be accurate. The Company undertakes no obligation to revise its forward
looking statements to reflect events or circumstances after the date hereof.
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