CVS 1998 Annual Report Download - page 7

strong growth and the front-store business is
consistently improving, achieving double-digit
same store sales increases in December. We
expect to see further improvements as our front
store strategies continue to take hold.
Capturing Two-Way Synergies
from the Arbor Acquisition;
We Will Capitalize on Best Practices
While integrating Revco, we simultaneously
forged ahead with the acquisition of Arbor,
which we completed in March 1998. The acqui-
sition provided us with the #1 market share
position in metropolitan Detroit, the nation’s 4th
largest drug retail market. We are pleased with
our progress on the integration of Arbor. All of
Arbor’s back-end and store systems were com-
pletely converted to CVS’ systems by November
service
and we closed the Arbor headquarters in
December. We achieved $20 million in partial
synergy savings in 1998 and we are on track to
achieve $30 million in annual synergy savings,
beginning in 1999. We are currently testing new
store layouts based on the roll-out of “best prac-
tices” from CVS and Arbor.
An Outstanding CVS Team, a Vibrant
Industry: The Outlook Is Bright
As we look ahead, we are very confident
about the future of CVS. Industry dynamics are
highly favorable. The American population is
aging, with many “baby boomers” now in their
fifties and requiring a greater number of pre-
scriptions. The increased use of pharmaceuticals
in managed care as the first line of defense for
healthcare, as well as the large number of suc-
cessful new prescription drugs, bodes well for
a growing demand for pharmacy services.
Although we are proud of our past accom-
plishments, we continually search for new and
innovative ways to make our stores the preferred
place to shop. Since many of the products we
feature are carried by other retailers, our strategy
has long been to differentiate CVS through
exceptional service and by re-inventing conven-
ience. Everything we do is aimed at making life
easier for our customers. Convenience starts with
location, and we strive for the best sites with the
easiest access. Making it easier for our customers
also means offering our Rapid Refill™ system,
drive-thru pharmacy, one-hour photo, and other
convenience services. For some customers,
ordering a prescription refill on the Internet is
preferable, so we now offer that option as well.
Furthermore, we have over 700 extended-hour
or 24-hour stores to help us “bring the care back
to healthcare.”
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Caring for our customers means providing convenient
options, such as drive-thru pharmacies. We now oper-
ate 360 stores with drive-thru pharmacies, and plan
to add over 400 more this year.