More is more " and less is more " in drugstores swap

The swap of six northern Nevada drug stores between Rite Aid Corp. and Longs Drug Stores Corp. comes as both companies look to gain further strength in markets where they're already strong.

And both show a willingness to get out of markets where they're relatively weak.

In the latest transaction, Longs will take over the assets of six Rite Aid stores two in Reno, one in Sparks, one in Sun Valley, one in Fallon and one in Carson City during the second quarter.

In exchange, Rite Aid will get six Longs stores in Washington, Oregon and California.

The deal marks the departure of Rite Aid from the northern Nevada market. It will have only one store in the area, its operation in Gardnerville.

"Reno was a relatively small market for us," says a spokeswoman for Rite Aid, a Camp Hill, Pa., company that operates more than 3,300 locations nationwide.

Although Rite Aid continues to operate 29 stores in the Las Vegas area, the company's growth strategy calls for it to muscle up in metro areas where it's already strong.

A similar philosophy guides Longs, which will have 17 stores in northern Nevada once the swap is completed. It's added new locations in Nevada only slowly in recent years.

Farra Levin, a spokeswoman for the company headquartered at Walnut Creek, Calif., notes that Longs decided earlier this year to close or sell 31 stores including all of its locations in Washington, Oregon and California.

The company simply wasn't able to create the critical mass of stores in those states to justify its effort.

Given the choice of making big investments to make a splash in the Northwest and Colorado, Longs decided instead to put the money into locations where it's well-established.

In markets such as Reno where the company already is strong, Levin says that additional stores allow the company to gain even more efficiencies. Advertising costs, for instance, can be spread across more locations.

And the Rite Aid locations all of them with drive-throughs expand Longs' reach into some new neighborhoods.

"We want to be either on your way to work on your way home," Levin says.

The Rite Aid stores covered in the swap are at 1695 Robb Drive, 8005 S. Virginia St., 5485 Sun Valley Boulevard, 1410 E. Prater Way, 1980 N. Carson St. in Carson City and 461 W. Williams in Fallon.

Long said it will assume the leases on store locations that weren't owned by Rite Aid.


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