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    Stater Bros. Sees In-store Pharmacies as the Way to Go

    COLTON, Calif. -- First-quarter profits may be flat for Stater Bros., based here, but the grocer is experiencing growth in the number of its pharmacy departments. In a telephone interview with Progressive Grocer, Stater Bros. v.p. and c.o.o. Phil Smith referred to the in-store pharmacies as a "good experience" for the company.

    COLTON, Calif. -- First-quarter profits may be flat for Stater Bros., based here, but the grocer is experiencing growth in the number of its pharmacy departments. In a telephone interview with Progressive Grocer, Stater Bros. v.p. and c.o.o. Phil Smith referred to the in-store pharmacies as a "good experience" for the company.

    According to Jack H. Brown, chairman, president and c.e.o. of Stater Bros. Holdings, Inc., in a statement: "The first quarter, with the major holiday period, had gross profit pressure due to the holiday season's promotional activity. The current-year expenses reflect increases in benefit costs, operating supplies, advertising, and pharmacy operations transition expenses." However, he also noted, "Our pharmacy operations, SuperRx, [have] added to [the] shopping experience and provided an additional service which our [shoppers] appreciate."

    Smith said that the retailer currently operates pharmacies in 21 stores and plans this year to open five new locations, all with pharmacies. "They're part of our standard package now," he noted. Additionally, during the same time period the company will retrofit pharmacies in two to three existing stores currently without pharmacies, with more such retrofits to follow. After purchasing 16 stores with pharmacies from Albertsons in 1999, according to Smith, Stater Bros. initially walled them off and ran the stores without pharmacies, then later got a third-party operator to run them. When the third-party operator couldn't keep up with Stater Bros.' expansion plans, the grocer began buying back the pharmacies and started running the departments itself.

    For the 13-week first quarter of fiscal year 2006 ended Dec. 25, 2005, Stater Bros. posted a sales increase of 3.33 percent to $867.0 million, vs. $839.1 million for the 13 weeks ended Dec. 26, 2004. Like-store sales rose 0.28 percent for the first quarter of fiscal 2006, compared with the year-ago period. The grocer posted net income for the quarter ended Dec. 25, 2005 of $3.3 million, the same amount as last year.

    The largest privately held supermarket chain in California, Stater Bros. Holdings, Inc. operates 163 supermarkets through its wholly owned subsidiary, Stater Bros. Markets.

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