wnetmacman wrote:pseudo3d wrote:But as for Fred's, I wouldn't say "Haggen all over again" because part of what made Haggen's purchase really bad was not just going into markets it had no experience in (small Northwest chain in near-border towns and Arizona?!?) or just expanding too fast, it was controlled by an investment group (that had actually bid on the stores), spent a ton of money closing and attempting to renovate stores, and then those stores weren't exactly equivalent to the stores they replaced, even if they were executed properly (which they were not).
Fred's is in a very similar financial position as Haggen. They have not turned a profit in some time, and now they're taking on a store base larger than the original company. While Fred's isn't as small as Haggen, they are still taking over stores that they won't understand the local demographics. Fred's is a very southern-oriented dollar store that just happens to operate pharmacies (which I've said before). And they aren't very good at either.
No, Fred's isn't owned by an investment group. That is what makes it more frightening, because there is no bankroll to back anything up. As far as renovations, I don't see them doing that in the very beginning, because the average Rite Aid store is similar in size as a typical new build Fred's. We even have two Fred's near here that are in old Rite Aid stores, though one has no pharmacy due to lease restrictions.
pseudo3d wrote:Keeping them as Rite Aids for a few years will allow Fred's to experiment with their customer base and perhaps bring back the same "experience" people liked with Longs. The catch is a strong showing in food and the ability to price it correctly.
Fred's does like to experiment with formats, but that usually fails too. They tried to expand hardware in their stores 2 years ago, but have already removed that because it just didn't work and they couldn't keep it stocked.
I've never heard of Fred's. Until today, I thought they were northwest-based. I don't think there are any Texas, not that there will be—I'm pretty sure that Rite Aid pulled out of Texas in the late 1990s when they closed the few K&B Drug stores they took over.
I don't think Walgreens (or Albertsons with Haggen) is trying to screw Fred's, it's that there are just no other big drug store chains around anymore thanks to consolidations by CVS, Walgreens, and Rite Aid in the last 10 or so years, eating up Sav-On/Osco, Eckerd, and no doubt a few other smaller players. The same thing happened with the grocery market, because unlike 1999, where Albertsons had a lot of choices on who to divest (not just Vons, but Ralphs and Raley's were in expansion mode), there just weren't enough "mainstream" players to absorb the stores.
As for a lack of investment group, it does introduce more questions for the publicly-traded company. What exactly happened at Haggen and Comvest was murky (selling the stores and leasing them back for quick cash might've worked, and may actually have made money for Comvest). We do know that Fred's closed 50 stores in 2008 (well, everyone was) due to "rising fuel costs" among other things. This does not bode well for Fred's, unfortunately, but there has to be more going on. I would bet money that there's an unknown player behind the Fred's purchase, their true intentions not known.
It would be nice if they ended up buying the Rite Aid name after their time was up, but there's just so many unknowns in play that it's unlikely that will happen.