After 52 years, Eckerd now part of history

The breakup of Eckerd Corp., one of the biggest companies with headquarters in the Tampa Bay area, became reality Sunday when J.C. Penney Co. sold it for $4.5-billion.

The deal quietly slipped Eckerd Corp. into local history after 52 years as a force in the economic, health care and charitable communities of Florida.

J.C. Penney ended its ill-fated odyssey in drugstores by selling what had been the nation's fourth-largest chain in two pieces.

In a closing just before midnight Saturday Central Time at a Dallas law office, CVS Corp. paid $2.15-billion and acquired 1,260 stores in the Sunbelt as well as Eckerd Health Systems, the $1.3-billion-a-year mail order pharmacy with operations centers in Largo, Pittsburgh and Kansas City, Mo. Jean Coutu Group, a Canadian drugstore chain, paid $2.375-billion for 1,539 Eckerd stores scattered from Georgia north to New York and the 41-acre Eckerd headquarters in Largo that now is for sale.

The loss of another corporate headquarters and the good-paying jobs that go with it will take years to replace while putting a dent in the region's economy and prestige.

"This is a sad day for Pinellas County," said Susan Latvala, chairwoman of the County Commission.

Finding a buyer for 500,000 square feet of empty warehouse and office space will take time. An investor could buy the place and lease it in smaller chunks relatively quickly, but would face a huge remodeling bill.

"That's one of the biggest buildings in the Tampa Bay area, so finding a single user will take two or three years of marketing," said John Dunphy, managing director of Colliers Arnold, a Clearwater real estate company. "It's going to be pretty difficult."

While Coutu hired 36,800 Eckerd store and warehouse employees who work in other states, the transaction set in motion Coutu's plan to lay off about 1,400 workers by closing the Eckerd headquarters by Jan. 31. Coutu is moving the administrative nerve center of its U.S. drugstore operation to Warwick, R.I., to oversee what is now the fourth-largest collection of drugstores in the country.

Coutu's operations in the United States, until now the 322-store Brooks Pharmacy chain in New England, quintupled to more than 1,800 with the purchase. But few Eckerd workers offered the choice were willing to move to Rhode Island. Coutu executives think they can return the Eckerd stores' slumping sales and profitability to the industry average, a feat that eluded Eckerd under Penney's management.

Coutu will keep the Eckerd name in those 13 states, but wanted a headquarters closer to where its stores are. The closest Eckerd to Largo now will be 250 miles away in Georgia. Coutu also has grounded Eckerd's two corporate jets at St. Petersburg/Clearwater International Airport, where the company operates a corporate aviation center used by many companies.

The first wave of layoffs at the Largo headquarters swept away 200 workers on Friday, including virtually all the senior management. Among those who left was J. Wayne Harris, the former supermarket executive who steered the chain through its final three turbulent years. He earned $2-million in salary in 2003, then netted $5.4-million by cashing in performance-based stock options and grants after the sale of Eckerd was announced in April. He could not be reached for comment.

Pinellas County officials said the loss of one of the biggest corporate headquarters in the county's history has taken time to sink in.

Said Latvala: "This is huge emotionally, because this was a local company started by local people. The jobs lost will have a huge impact. This is going to be felt deeply in both the psyche and economy of Pinellas County."

Founded with three stores in Tampa and Clearwater in 1952, Eckerd grew into the biggest drugstore chain in the Southeast. Its charismatic founder Jack Eckerd, who died at 91 in May, sold his interest in the company in 1986. But the company continued to grow as a Fortune 500 company until J.C. Penney acquired it in 1996 to combine Eckerd with its 800-store Thrift Drug chain and three other regional chains.

J.C. Penney stock closed at a five-year high of $40 a share on Friday. Investors, who had been bidding up Penney shares as the department store chain's fortunes improved and the Eckerd sale was hatched, were further enamored that the deal would go through.

While Penney's already took a big loss on the investment, the company netted $3.5-billion in cash from the sale to pay down debt and buy back outstanding shares.