Inline ECKERDS First To Close?
May 1, 2004 12:00 PM, Renée DeGross
On the heels of J.C. Penney's $4.5 billion sale of Eckerd to CVS Corp. and Jean Coutu Group's Brook's Pharmacy, questions linger about potential store relocations and closures, particularly for CVS.
Most Eckerd's are leased, with many on outparcel ground leases. But real estate experts predict casualties to come in the form of older, inline Eckerd locations, many of which were underperforming. Jean Coutu Group of Canada says that for now, no closures are expected. Most of the stores are in markets where the company does not operate.
However, officials at Woonsocket, R.I.-based CVS admit that some of Eckerd's underperforming and older stores may be relocated or closed. Ninety percent are in Texas, Arizona and Florida. In those markets, about 65 percent are freestanding with drive-thrus. “There is no question this is more of a turnaround situation,” says Tom Ryan, CVS chief executive, during a conference call.
Inline Eckerds could be among the first to close. Outparcel ground leases are a lesser concern since there's always a fast-food establishment waiting to snap up those spaces. However, inline Eckerds at around 10,000 square feet — may have fewer subleasing options available.
And though some of those older Eckerd leases may look attractive with cheaper rents to retailers such as Family Dollar or Dollar Tree, those options are drying up, according to Doron Valero, chief executive of Equity One, which owns 27 shopping centers with Eckerds stores.
“They're problematic,” Valero says. “If a supermarket is in the center, they don't like to have dollar stores anymore because those stores sell groceries.” According to Valero,10 Eckerds in the Equity One portfolio are subleased already. The others, he says, are outparcels and may not be closed.
CVS
No. Stores: 1,260 plus distribution centers in Dallas, Houston and Orlando, Fla.
Purchase Price: $2.15 billion
Acquiring Stores In: Florida, Texas, Arizona, Louisiana, Oklahoma, Mississippi, Missouri, Kansas and Alabama.
Jean Coutu Group
No. Stores: 1,540 and Largo, Fla., headquarters
Purchase price: $2.37 billion
Acquiring Stores In: Georgia, N.Y., Connecticut, N.J, Delaware, Maryland, Pennsylvania, Ohio, West Virginia, Virginia, North Carolina, South Carolina and Tennessee.
SOURCE: Bernard Sands and company Web sites
