CVS 1999 Annual Report Download - page 6

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4
CVS Corporation
4,100 stores in 26 states & D.C., maintaining our position as the largest drugstore chain in America.
that our one-year sales gain of $3 billion in 1999 is greater than our entire sales
level for 1990.
Our front store business delivered a 3.6 percent increase in same-store sales. We
experienced substantial growth in key front store destination categories across the
chain, including photo, beauty and seasonal merchandise, that enabled us to
continue to gain market share. Most significantly, our photo
business experienced rapid growth as we more than doubled
the number of one-hour labs in our stores and dramatically
increased market share. We expect that growth to continue
with the strategic alliance we formed with Kodak to provide
innovative new services and position CVS as one of the
largest and fastest-growing photo retailers in the United States.
We also remain one of the largest and fastest-growing
beauty retailers in the nation, achieving significant market
share gains in key beauty categories, including hair care,
skin care and hair color. We continue to leverage our
dominant health franchise to gain market share in pharmacy
as well as substantial gains in categories such as vitamins,
stomach remedies and baby care products. Our success is evidenced by our strong
organic comparable store sales gains, which continue to lead the industry.
Careful management of our front store mix has helped us achieve improved
front store gross margins while we continue to invest in reducing everyday prices
in high traffic key categories, such as baby care. We expect our focus on branding,
innovation, convenience and execution to drive new growth in our front store
business. We have grown our market share position in 1999 and expect continued
gains in 2000.
We also are very pleased with how the integration of the former Revco stores
into our business has bolstered our front store position. We continue to see steady
gains in front store sales in the former Revco markets, which are experiencing the
most rapid same-store sales growth of any geographic area of our chain.
We demonstrated substantial improvement in inventory productivity, which
ended 1999 at 4.0x. We expect continued improvement in our inventory turns, with
a goal of 5.0x in the next few years, and continued increases in free cash flow. We
generated $165 million in free cash flow in 1999, exceeding our goal.
During all of this exciting business development activity, we remained focused
on our core business and delivered quality earnings throughout 1999, with comparable
earnings per share rising 23 percent to $1.55. Our outlook for 2000 remains quite
positive, even as we continue investing in new long-term growth opportunities.
If there can be any disappointment for 1999, it was in our stock price, which fell
from a record high in February 1999. However, we were not alone in experiencing
fluctuations caused more by market activity than our own performance. We are
confident that our continued positive results and our commitment to growing our
business for the long term will be recognized for the value they provide to our
customers and our shareholders.
CVS offers complete photo-
finishing services, including
one-hour photo, digital and
online capabilities, and a
variety of film and
camera products.