Drugstore Doings

Not the biggest drugstore chain in the U. S., but the biggest money-maker is Walgreen Co. It operates fewer stores (508) than United Drug, Inc. (568), has had none of the financial headaches of that rival. United operates mostly in the East (Liggett stores) and in California (Owl stores), while Walgreen concentrates in the Midwest. In 1932 United was eager to merge with Walgreen but was turned down, and next year the Liggett-controlled chains went through bankruptcy. Walgreen prospered during Depression, even expanded. Last week, to furnish working capital for further expansion, Walgreen Co. filed with SEC a recapitalization plan approved three days prior by the stockholders which provides for issuance of $10,000,000 of new 4 1/2% preferred stock.

Behind Walgreen Co.'s expansion is the simple principle of Founder-President Charles Rudolph Walgreen that a chain can be as long as it wants provided each link is strong. Each of his corner drugstores in 33 States can stay put so long as it is profitable, no longer. Now 63, bald, humorless, stern-faced Drugman Walgreen started rolling pills in a Dixon, Ill. drugstore in his teens. He left Dixon for Chicago when he was 20, got a drug clerk's job the day he arrived, started studying to be a pharmacist. He bought his first store on Chicago's South Side when he was 29, his second in 1909 when he was 36. Founding of C. R. Walgreen & Co. in that year so fired his expansion enthusiasm that he acquired seven more stores in the next seven years. In 1916, when the present Walgreen Co. was incorporated, his nine stores in Chicago sold $270,000 worth of goods.

Since 1920 Walgreen's growth has almost been an arithmetical progression. In 1929, the company's best year, net profit from 321 stores was $3,097,000. For the drug year ending last September sales were more than $61,000,000, with a net profit of $2,785,000.

Sales of drugs comprise 55% of Walgreen Co. business, but drugs to Walgreen mean not only prescriptions and patent medicines but all of more than 13,000 items not sold at cigar counters and soda fountains, including sunsuits, liquor, radios, alarm clocks, golf balls. Prescriptions account for only 2 1/2 of total sales, proprietary medicines 30%. Like every other chain store, Walgreen favors its own brands.-- However, a customer asking for a nationally-advertised product always gets it, usually at a lower price than anywhere else in the neighborhood. Motto of the 20th-century general store: "You're always welcome at Walgreen's."

Following the stockholders' meeting fortnight ago Walgreen directors voted a 50% stock dividend on common--with the current $2 dividend rate to continue. Previous stock dividends: 1921 (100%); 1922 (8%); 1923 (split ten for one); 1923 (16%); 1924 (16%); 1925 (16%); 1927 (split ten for one); 1934 (5%). Drugman Walgreen & family own nearly one-fourth of the common stock. Says Charles Walgreen: "There are no fixed rules for business success. I was not possessed with a vision that permitted me to foresee the developments that followed. It just happened."

Modest though the Walgreen family may be among U. S. business dynasties, it is not unknown out of the drugstore business. In 1935 one family breakfast after another was spoiled for Drugman Walgreen because his niece, Lucille Norton, 18, prattled about what she was studying as a freshman at the University of Chicago (TIME, April 22, 1935). Uncle Charles found out that Niece Lucille's reading list in a social science course included books about Soviet Russia in addition to such standbys as Herbert Hoover's American Individualism and Walter Lippmann's A Preface to Morals. Upshot was he decided to withdraw her from school, charged she had been "insidiously exposed" to Communist "influences." A great press uproar and a State Senate investigation followed, but nothing much besides froth came of the whole thing.

About half of the $10,000,000 secured in Walgreen Co.'s new financing will go to retire 40,837 shares of the present 6 1/2% preferred stock, the rest for 40 new stores scattered all over the U. S. Scheduled for opening this summer in Miami is a five story Walgreen drugstore with three stories of soda fountain & eating facilities which will be Walgreen's biggest and best.

*Examples: Peau Doux shaving cream (named after Mr. Walgreen's bulldog Po Do); hardware items such as Dart's O'namel (named after Son-in-Law Justin W. Dart).

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