RETAIL TRADE: Fumble?

When he opened the world’s biggest drugstore in Hollywood two years ago, Rexall Drug, Inc.’s President Justin Whitlock Dart threw a $90,000 party complete with film stars, searchlights and 10,000 free orchids. To Justin Dart, onetime tackle at Northwestern University, the celebration was the booming kickoff to the Rexall team’s postwar expansion program. But by last week many a stockholder had begun to wonder why Rexall had not followed up with a few smashing plays.

Under aging Wonder Boy Dart, now 42, Rexall’s earnings slipped from $4,048,403 in 1946 to $1,415,869 last year. For the first nine months of this year, Rexall reported a loss of $1,167,125. For the full year, Dart estimated last week, the loss would be cut, though it would still be around $500,000. Said Dart: “We knew that trouble was coming—but we didn’t realize it would hit us so fast.”

The trouble was that Rexall’s expansion program had been badly timed. Older, smaller stores had been closed up before the big new superstores could be opened. On top of that, many a small store was sold at a heavy loss simply to get rid of it while the new ones cost far more to build and operate than was expected.

Employees’ morale was not improved by this program. When Rexall’s earnings began to slip, Dart trimmed 2,500 from the staff including many who had moved west when Dart had shifted Rexall headquarters from Boston to Los Angeles four years ago. In the realignment of stores, many an oldtimer found himself demoted or bypassed for promotion by some comparative newcomer Dart had brought in.

Despite the adversity of the game, Dart was still in it and he didn’t seem to be in danger of being sent to the bench; of Rexall’s 13 directors, nine are Rexall employees whom he appointed to the board. President Dart still hopes to boost business with his superstore plan. He has cut the number of Rexall-operated stores from 540 in 1946 to 340, hopes to level off with about 300 in 1950. Said he cheerily: “To those not in the company we look worse and worse. But inside, in the overhead department, we’re feeling better and better.”