PRICE COMPETITION PROMPTS BJ's TO DROP PHARMACIES

FEBRUARY 01, 2007

The first major casualty of the retail industry's ongoing generic drug price wars appears to be BJ's Wholesale Club, a 171-unit warehouse store chain that has announced plans to close down its in-store pharmacies due to shrinking profit margins. BJ's opened its first pharmacy less than 5 years ago. It followed the lead of Wal-Mart, Target, and other major chains by slashing prices on prescriptions for hundreds of generic drugs to $4 last fall. Although industry analysts cited a variety of factors in the chain's decision to abandon its pharmacy operations, depressed profits due to the generic prescription price competition may have been the final straw for BJ's.

The closure of all 46 in-store pharmacies was estimated to have been complete by February 3, 2007. A spokesperson for BJ's said the company would not comment on the decision to disband the pharmacy. In a conference call with investors last week, however, Interim Chief Executive Officer Herb Zarkin said BJ's prescription business was not growing. "It just didn't make a lot of sense for us to keep putting the investment in," he said.




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