No. 5: Sale of USA Drug, related businesses one of year’s top headlines

Editor’s note: The sale of the locally owned USA Drug store and related businesses is the No. 5 story on The Commercial’s Top 10 list for 2012.

Stephen Lee LaFrance Sr., who in 1968 opened a pharmacy in space leased from the Gibson’s department store at 10th Avenue and Main Street in Pine Bluff, built the seventh largest privately held Arkansas company by developing and acquiring pharmacies.

“I was the small guy without a chance,” he recalled recently with a smile. The pharmacy on Main Street posted a loss for the first quarter of operation.

Walgreen Co. of Deerfield, Ill., purchased the Pine Bluff-based Stephen L. LaFrance Pharmacy Inc., the operator of USA Drug and Super D Drug among others, in a $438 million deal announced in July.

LaFrance, chairman and owner of Stephen LaFrance Holdings Inc., said that he decided to sell the business to have more time to spend with his family, including his three children — Stephen Jr., Jason and Amy LaFrance Bancroft — and seven grandchildren.

“My wife and I have been married for 44 years,” he said. “I’m going to take care of our family.

“This company is my baby,” LaFrance said, noting the sale was a difficult decision. “I started it from scratch. I’m going to miss it terribly.”

LaFrance retired as president and CEO in 2006 but continued serving as the chairman of the largest privately held pharmacy chain in the United States that was frequently cited in trade publications for its operational model.

“The Walgreen’s management has said that they will run our stores as a separate chain. They are a fine company. They are gentlemen and fair and I have nothing but high praise for them. I had nothing but high praise for them when I competed with them.

“We started USA Drug in Pine Bluff … with the first store in Broadmoor and the second on 28th.”

The drug store chain included USA Drug, Super D Drug, May’s Drug, Med-X, Drug Warehouse, a private lable line Select Brand and SAJ Distributors, the latter a full-service wholesale distribution company located in Pine Bluff.

In October 1997, LaFrance formed a family-owned and operated corporation, Stephen LaFrance Pharmacy Inc., to own all of the stores operating under the various names: 144 sites in Arkansas, Kansas, Mississippi, Missouri, New Jersey, Oklahoma, New Jersey and Tennessee.

When the sale was announced, the company had 3,133 employees, with about 1,374 in Arkansas and 500 in Jefferson County.

Walgreens, the nation’s largest drug chain and last year had sales of $72 billion. It operates 7,890 drug stores in all 50 states, the District of Columbia and Puerto Rico. USA Drug and the other drugstores in the LaFrance chain recorded sales of $825 million last year, Walgreens said.

Walgreen’s, the nation’s largest drugstore chain, was a LaFrance competitor for years. Both have posted major gains by acquiring competitors and both have closed or sold stores after acquisitions.

L&R Distributors Inc. of Brooklyn, N.Y., agreed to purchase the assets of SAJ Distributors and the private label line Select Brand from Walgreen. At the most recent meeting of the Jefferson County Economic Development Corp., economic development officals said there will be 119 employees at SAJ when L&R takes over in January or February. The board agreed to offer the company an incentive package in return for them bringing the number of employees to 200 in five years.

Stephen L. LaFrance Pharmacy Inc. has placed some of its drug store buildings on the market as it continues to sell assets related to its USA Drug and Super D Drug stores. The sale to Walgreen did not include the sale of several of the buildings that house USA Drug and Super D Drug locations.

For-sale signs were recently erected in front of the Super D Drugs at West 28th Avenue and South Hazel Street and the USA Drug location at West 28th Avenue and South Fir Street.

A graduate of the University of Louisiana at Monroe and Northeast Louisiana State College with a degree in pharmacy, the elder LaFrance said service is the absolute “imperative” to stores that offer many of the same products and services as competitors.

LaFrance said his chain was proof that a small company starting in Pine Bluff can succeed when service is the driving force.