Other Free Encyclopedias » Company History » Pharmacy and Drug Stores

Big B, Inc. Business Information, Profile, and History

company stores drug drugs

2600 Morgan Road Southeast
Bessemer, Alabama 35023
U.S.A.

Company Perspectives:

We view our Company as a hard working machine--one which consistently and dependably satisfies the needs of tens of thousands of individuals each day. Keeping pace with the ever changing needs of our customers, the demands of volatile market trends, and the accelerating cycle of new technology often mean reinventing the machine, tuning up the parts, and keeping its mechanisms running as smoothly as possible.

History of Big B, Inc.

Ranking as the tenth largest drug store chain in the United States, Big B, Inc. operates a chain of approximately 400 drug stores in the southeastern United States. During the mid-1990s, Big B operated its drug stores under the names "Big B Drugs" and "Drugs for Less," and operated a smaller chain of stores that sold and rented medical equipment for home use under the name "Big B Home Health Care Centers." Formerly a part of a supermarket chain known as Bruno's, Inc., Big B became a separate corporate entity in 1981 and quickly expanded the number of its retail units, becoming one of the largest and fastest-growing retail prescription providers in the nation. All of the company's stores were located within a 400-mile radius of its distribution center in Birmingham, Alabama, with the greatest concentration of stores existing in Alabama and Georgia. The company also operated more than 50 stores in Florida, Tennessee, and Mississippi.

Origins

Through the entrepreneurial efforts of Joseph S. Bruno, two retail chains were created, both of which flourished in the southeastern United States. The first company founded by Bruno was Bruno's, Inc., a supermarket chain he started in 1932. Twenty years old at the time, Bruno used his family's savings to start the business, investing $600 in the enterprise at the height of the Great Depression. Over the course of the ensuing three-and-a-half decades, the supermarket chain evolved into an unqualified success, proving to be strong enough to shed one aspect of its business as a separate corporate entity. Such was the foundation of Big B, a one-time division of Bruno's, Inc. that was spun off from the supermarket chain to pursue its own development. In roughly a decade, Big B evolved into a formidable retail chain itself, propelled forward by an aggressive expansion program during the 1980s and the first half of the 1990s that elevated the company to the ranks of the largest drug store chains in the United States.

Before Big B gained the stature that described the company during the 1990s, it operated for more than a decade within Bruno's, Inc.'s corporate structure, existing as a division of the supermarket chain from 1968 to 1977. In July 1977, the drug store division of Bruno's, Inc. was organized as a separate business, but remained under the supermarket chain's corporate umbrella as a wholly-owned subsidiary named Big B. Four years later, Big B was spun off to Bruno's, Inc.'s shareholders and emerged as a separate entity. Following the 1981 spin off, Big B spent its inaugural decade entrenching its presence in its home state of Alabama and extending its territory of operations to include neighboring states. Initially, the company operated a chain of retail drug stores under the name "Big B Drugs," which received its merchandise from a distribution center established in Birmingham, Alabama, during the mid-1980s. From this distribution center, which served as the hub of Big B's operations into the late 1990s, the company's stores stocked both brand name and generic prescription drugs, pharmacy-related products, and general merchandise. Gracing the shelves were a broad range of cosmetics, greeting cards, books and magazines, tobacco products, toys, electronics, small electrical appliances, convenience foods, as well as the sundry items found in most drug stores across the country.

The company grew swiftly during the 1980s, by expanding the number of its Big B Drugs stores. Big B Drugs stores averaged 9,000 square feet of retail space and represented the backbone of the company even after the company started another type of retailer in 1988. In response to the rapidly expanding discount drug store market during the 1980s, Big B launched its own deep discount retail concept by debuting "Drugs for Less" stores in 1988. Drugs for Less stores were roughly twice as large as their Big B Drugs counterparts, averaging 20,000 square feet of retail space. With these two retail concepts predicating its growth, Big B entered the last year of the decade ready to join the elite company of the country's largest retail drug store chains. An acquisition completed by Big B in 1989, turned desire into reality for company executives at headquarters in Bessemer, Alabama.

Not long after establishing its first Drugs for Less stores, Big B completed a bold move into neighboring Georgia when it acquired 85 stores from Peoples Drugs Stores in February 1989. The stores, which were part of the Reed Drug Co. chain and primarily situated in the Atlanta and Columbus, Georgia markets, cost the company $52.4 million, the price to pay for significantly strengthening Big B's presence in Georgia. The acquisition also brought Big B into the Atlanta market for the first time, setting the stage for a contentious chapter in the company's history seven years later when the battle for supremacy in Atlanta embroiled Big B in a hostile takeover attempt. Before the company would become mired in fending off an unwanted suitor, however, there were years of growth, particularly as the company entered the 1990s and prepared to mount an ambitious expansion program.

Growth in the 1990s

Nine years old as it entered 1990, Big B had accomplished much during its short tenure in the Southeast drug store industry. Further robust growth appeared assured. The company had recently opened its 300th store and construction was underway for a 200,000-square-foot expansion of its existing 220,000 square foot distribution center in Birmingham, Alabama. A third facet to the company's business had also been added when Big B launched a chain of home health stores operating under the banner "Big B Home Health Care Center." Fueled by this growth on all existing fronts and new fronts, sales for the 1989 fiscal year were up a record 54 percent, rising to $418 million, and a record increase--67 percent--in the share of prescription drug sales of the company's total sales was registered. About the only aspect of the company's operations that was less than desirable was its weakened profitability, but even this stain on Big B's balance sheet was a sign of growth. Profits declined by $3.5 million in 1989, but this loss was primarily attributable to the financing costs and other expenses related to the acquisition of the Reed Drug Co. stores and their conversion to the Big B format.

Declining profits, accordingly, were no cause for the company to scale back its plans for the future and reassess its business stance. Instead, Big B executives planned to open 15 new stores in 1990, 12 of which were expected to be Big B Drugs stores and the remaining three slated for establishment as Drugs for Less stores. By this point, Big B operated four Big B Home Health Care Centers in Alabama, 16 Drugs for Less stores in Alabama, Florida, Georgia, Mississippi, and Tennessee, and 277 Big B Drugs stores scattered throughout Alabama and four neighboring states. Nearly half of the company Big B Drugs stores were located in Alabama, where Big B operated 133 stores. The acquisition of the Reed Drug Co. chain, amplified the company's presence in Georgia significantly, increasing its number of stores to 106 by the beginning of summer in 1990. Elsewhere, the number of Big B Drugs stores were less concentrated, with six stores operating in Mississippi and another 13 stores established in Tennessee.

Profits continued their decline in 1991 when Big B lost $1.4 million on sales of $463.6 million, but the following year the company climbed back into the black with strength, posting $6.5 million in profits on sales of $487.8 million. As these encouraging financial figures were being recorded, Big B sold off 2.1 million shares of stock to pay off bank debt and to gain the financial resources to launch an expansion program. The 1992 stock offering, which was expected to bring in roughly $30 million, was an intrinsic part of management's expansion strategy, enabling it to announce with confidence that Big B would open eight to 10 additional drug stores before January 30, 1993 and either open or acquire up to 20 stores by the beginning of 1994. As the company moved forward with its expansion plans it executed them as it had before, never straying beyond a 400 mile radius from its distribution center in Alabama. Though the number of stores would increase in the years to come, it was not the intent of Big B's management to develop any of its retail concepts into national chains. Instead, company executives were looking to saturate markets where the company already had a presence, thereby increasing its market share and enabling it to serve its entire operations from its nearly 500,000 square foot distribution center in Birmingham, Alabama.

Aside from entrenching its position in its five-state service territory, Big B executives were also desirous of increasing the percentage of the company's prescription drug sales. Toward this end, Big B completed two important moves in 1992. During the year, the company started a mail-order prescription drug program and in December acquired a nursing home pharmacy service, which provided medicine for roughly 2,000 beds in Atlanta. On the heels of these two deals, Big B officials announced plans to open 10 to 12 new stores in 1993 and 15 to 20 the following year. By the beginning of summer in 1993, Big B had already exceeded the growth projections for both 1993 and 1994.

Early in 1993, Big B acquired 45 Treasury stores from J.C. Penney Company's Thrift Drug Inc., paying $16.5 million for the Atlanta-based stores. Once integrated into the company's fold, the 45 Treasury stores lifted the number of Big B Drugs stores in the Atlanta area to 109, enough to move the company past Drug Emporium to rank as the second-largest drug store chain in the Atlanta market. By the following year the company ranked not only as a leading contender in the Atlanta market, but also as one of the 17 largest drug store chains in the United States, supported by more than 350 stores.

In 1995--Big B's 1996 fiscal year--the company achieved a record high in sales, generating $737.1 million during the year compared to $668.2 million for previous year. Profits, however, took a precipitous plunge, dropping from $15.1 million to $2.6 million as the company's pharmacy-related gross margins declined. Despite the severe drop in Big B's net income, executives at company headquarters were unruffled. Big B continued to tout itself as "one of the largest and fastest-growing retail prescription providers in the Southeast," according to the company's annual report that announced the drop in profits. During the year, the company filled more than 15 million prescriptions, a total that pointed to the successful efforts of the company during the previous several years to increase the prescription-related segment of its business. As a result, combined pharmacy sales accounted for more than 50 percent of Big B's revenues for the first time, giving the company the sales mix it had been striving to achieve during the first half of the 1990s.

Big B opened 23 stores in 1995, many of them free-standing structures with drive-thru windows and on-site photo labs. By the end of the year, there were 384 stores composing the Big B drug store empire, with 170 stores in Alabama, 161 stores in Georgia, 23 stores in Florida, 23 stores in Tennessee, and seven in Mississippi, all of which were within 400 miles of the company's distribution center in Birmingham, Alabama. The company continued to hold steadfast to its policy of not expanding beyond a 400-mile radius from the Birmingham distribution center even as its charted ambitious expansion plans for the late 1990s. Planning to limit its expansion to markets where the company already had a presence, Big B officials envisioned room for 600 stores within the confines of the geographic boundaries it had established for itself, giving it ample room to continue the pace of expansion it recorded during the first half of the 1990s into the beginning of the 21st century.

Hostile Takeover Attempt

As the company moved toward its goal of establishing a total of 600 stores in the Southeast (operating 389 stores by mid-1996), an unexpected development arose that dominated the company's attention as it planned for the future. In the summer of 1996, Revco D.S., Inc., the second-largest drug store chain in the United States, made a private offer to acquire Big B, an offer Big B officials rebuffed. With a total of 2,200 drug stores, 75 of which were located in the Atlanta metropolitan area, Revco was intent on becoming the largest drug store chain in the Atlanta area, a distinction the acquisition of the 90 Atlanta Big B stores would bestow on the Twinsburg, Ohio-based drug store chain. Two years earlier, Revco had nearly doubled its size by acquiring Cincinnati-based Hook-SupeRx Inc. to become the country's second-largest drug store chain, and as company officials scanned the horizon in 1996, the opportunity to acquire Big B, which by this point ranked as the 10th-largest drug store chain in the country, was irresistible. Revco did not take "no" as an answer.

Wholly focused on acquiring Big B, Revco announced on September 9, 1996 that it was commencing a cash tender offer for all of the outstanding shares of Big B. The takeover attempt, which D. Dwayne Hoven, Revco's president and chief executive officer, described as "truly a win-win opportunity for Revco and Big B shareholders, employees, and customers," was met with disdain at Big B's headquarters. In response to Revco's unsolicited bid, Big B announced its board of directors had unanimously voted to reject the offer and that a lawsuit had been filed to prevent Revco from contesting the anti-takeover provisions. Big B's anti-takeover provisions, what it called its "poison pill," prompted Revco to file a counterclaim against Big B, alleging that the poison pill created by Big B violated Alabama law. As Big B prepared for 1997, the lawsuits remained unresolved, but the company continued to expand its operations, intent on fending off Revco's offer and pursing its goal of establishing 600 stores in the Southeast on its own.

Principal Operating Units: Big B Drugs; Drugs for Less; Big B Home Health Care Centers.

Cole National Corporation Business Information, Profile, and History [next] [back] Big A Drug Stores Inc. Business Information, Profile, and History

User Comments

Your email address will be altered so spam harvesting bots can't read it easily.
Hide my email completely instead?

Cancel or


This web site and associated pages are not associated with, endorsed by, or sponsored by Big B, Inc. and has no official or unofficial affiliation with Big B, Inc..