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Duane Reade Inc.

Type	Private
Founded	1960
Headquarters	New York, New York
Key people	John A. Lederer, Chairman and CEO Abraham, Eli, and Jack Cohen, founders
Products	Retail - Pharmacy - Photo
Revenue	▲ 1.58 billion USD (2006 fiscal year)
Employees	6,100 (as of 2006)
Parent	CSK Developments (since 2009)
Website	www.duanereade.com

Duane Reade is a chain of drug and convenience stores, primarily located in New York City, known for its high volume small store layouts in densely populated Manhattan locations.

[edit] History

Founded in 1960, the chain was started with three stores by Abraham, Eli, and Jack Cohen, with a warehouse located between the Duane and Reade streets on Broadway in lower Manhattan.^[1] The Cohen family sold Duane Reade to Bain Capital in 1992^[2] "for a reported $230 million".^[3] Bain Capital in 1997 then sold majority ownership of the chain to DLJ.^[4] Duane Reade completed its initial public offering (IPO) on February 10, 1998, trading on the New York Stock Exchange under the ticker symbol DRD.^[5] On August 2, 2004, the company announced it was acquired by Oak Hill Capital Partners and taken private.^[6] In November 2008, Duane Reade began rolling out a new logo.^{[citation needed]} In April 2009, Duane Reade hired DeVito/Verdi as its lead advertising agency.^[7]

[edit] The chain

A shopper in an aisle at a Duane Reade store in Penn Station.

[edit] Store offerings and layouts

Gary Charboneau, the company's senior vice-president of sales and marketing since 1993, explained his store layout strategy in New York magazine in 2005. He designed each store using four sections: one for beauty and cosmetic products, another that serves as a pharmacy, a third section for seasonal products such as cards and candy, and a fourth for household and grocery items. Cosmetic items were placed near store entrances, pharmacy sections were moved to the rear of stores since—according to Charboneau—"people don’t browse for prescriptions", and the other two sections occupied remaining space. As Ian Mount wrote in the magazine article, "half of Duane Reade’s sales come from food, cosmetics, and the like."^[1]

[edit] Expansion

Under CEO Anthony Cuti, who was previously president of Pathmark, the store expanded from 59 stores in 1996 to 249 stores in May 2005, with more stores in New York City than any other drugstore chain.^[1] In 1998 Duane Reade acquired Rock Bottom Stores Inc, another drug retail chain, for $61 million and an additional $30 million for the 38 stores which were converted.^[8]

While sales for Duane Reade rose from from $1.17 billion in the 2001 fiscal year to $1.47 billion in 2003, the combined impact of union disputes, a local recession, and the destruction of their best-performing store in the September 11 attacks forced the company to slow its expansion from 30 new stores a year in 2001 and 2002 to no more than 17 a year in 2003 and 2004.^[1] Despite its expansion, the company had long-term debts of $405 million by October 2008, losing $33.1 million in the first half of that year.^[9] Almost all of its stores are located in New York City or the immediate suburbs.

[edit] Litigation and disputes

Duane Reade and its executives have been involved in various disputes with federal and local governments and labor unions over its business practices.

Its embattled CEO Cuti, along with former CFO William Tennant, were indicted on October 9, 2008 in Manhattan federal court for falsely reporting company income and conspiring to commit securities fraud from December 2000 to June 2005.^[10] Cuti had already been replaced in November 2005 by industry veteran Richard Dreiling, COO of San Francisco-area-based Longs Drugs stores.^[11]

Two unions and Duane Reade Inc. struck a deal on April 11, 2006 to close a five-year contract dispute. The three-year deal covers "all of Duane Reade's clerks, cashiers, pharmacy clerks, pharmacy technicians, and photo technicians", and it closes a dispute dating from September 2001, when their previous contract expired. As part of the deal, Duane Reade and the unions settled all outstanding union and company claims before the National Labor Relations Board.^[12]

In November 1997, the company settled charges that it sold drugs and other products in its New Jersey stores that were expired or overpriced. It agreed to pay a total of $200,000 in civil penalties, investigative costs, and fees, and to comply with the state's laws and regulations, but did not admit wrongdoing.^[13]

[edit] References