Duane Reade Inc. Reports Record First Quarter Sales and Earnings Results

- Earnings Per Diluted Share Increases 27.3% To $0.14 On 20.1% Sales Gain -



Apr 30, 2001, 01:00 ET from Duane Reade, Inc.

    NEW YORK, April 30 /PRNewswire/ -- Duane Reade Inc. (NYSE:   DRD) today
 reported record sales and earnings for the first quarter ended March 31, 2001.
     Net sales for the first quarter were $271.7 million, a 20.1% increase over
 last year's first quarter, with pharmacy sales increasing 30.0% and
 contributing 37.5% of total sales.  Same store sales increased 8.5% over last
 year, including a 16.9% increase in pharmacy same store sales and a 4.0%
 increase in front-end same store sales.
     Net income for the quarter increased 36.1% to $2.6 million, or $0.14 per
 diluted share, compared to $1.9 million, or $0.11 per diluted share, in the
 first quarter last year.  The first quarter's net earnings were fully taxed at
 42.9% of pretax earnings compared to a 44.0% tax provision in the prior year.
     The Company opened eight new stores during the quarter compared to four
 stores in the comparable period last year.  As of March 31, 2001 the Company
 operated a total of 180 stores.
     Commenting on the Company's performance, Anthony J. Cuti, Chairman of the
 Board and Chief Executive Officer, stated, "We are especially pleased with the
 8.5% same store sales increase which was accomplished despite a challenging
 market environment and adverse weather patterns throughout the New York metro
 region.  Of particular note, during the first quarter we achieved
 exceptionally strong front-end sales as a result of our continued emphasis on
 maintaining high in-stock inventory positions and our value oriented loyalty
 card sales promotions.  Additionally, we continue to make significant progress
 with our new store growth program, opening a total of eight new stores during
 the first quarter with as many as ten additional openings scheduled during the
 first half of the year.  With these positive trends in our business, we are on
 track to achieve our sales and earnings objectives for fiscal 2001."
     Gross profit margin for the first quarter declined slightly to 23.8% of
 sales compared to 24.2% in the comparable period, due primarily to an
 increased proportion of lower margin pharmacy and third party pharmacy sales.
 Gross margin was further impacted by a comparatively mild flu season, which
 resulted in lower than normal sales of higher margin flu related generic
 prescriptions.
     Selling, general & administrative expenses increased to $44.5 million, or
 16.4% of sales, compared to $36.7 million, or 16.2% of sales, in the previous
 year. The slight increase as a percentage of sales reflects higher promotional
 costs in support of new store openings as well as increased store maintenance
 expenses associated with adverse winter weather and snow removal.
     EBITDA (earnings before interest, taxes, depreciation, amortization and
 other non-cash items) for the first quarter increased 12.1% to $21.1 million,
 or 7.8% of sales, compared to $18.8 million, or 8.3% of sales, in the previous
 year.
     Operating income increased 13.5% to $13.3 million, or 4.9% of sales,
 compared to $11.7 million, or 5.2% of sales, in the previous year.
     Income before taxes for the quarter increased 33.4% to $4.6 million, or
 $0.24 per diluted share, compared to $3.4 million, or $0.19 per diluted share,
 in the first quarter last year.
     Income taxes for the quarter amounted to $2.0 million and reflected an
 effective rate of 42.9% compared to $1.5 million and an effective rate of
 44.0% in the previous year.
     Pre-opening costs for the eight new stores amounted to $0.5 million as
 compared to $0.3 million for the four new stores opened in the previous year.
     Mr. Cuti concluded, "We are very encouraged by our performance in the
 first quarter.  Despite challenging economic conditions, we are cautiously
 optimistic about future performance.  We believe we are well positioned for
 strong growth and our financial outlook remains positive.  With respect to the
 second quarter, we anticipate revenue increases in the range of 18% to 21% and
 we currently expect diluted earnings per share of $0.36.  Looking to the
 balance of 2001, we remain confident in our ability to achieve revenue growth
 in the range of 12% to 15% over the 53 week 2000 fiscal year and net earnings
 per diluted share between $1.48 and $1.52.  These estimates for the second
 quarter and the full fiscal year exclude any potential impact from the planned
 offering of common stock announced today in a separate press release."
     The Company will hold a conference call on Monday, April 30, 2001 at
 10:00 AM Eastern Time to discuss its financial results for the first quarter
 of 2001 and to provide its outlook for the current year.  A live webcast of
 the call will be accessible from the Investor Information section of the Duane
 Reade web site (http://www.duanereade.com) and the call will be archived on
 the web site until May 13, 2001.  Additionally, a replay of the conference
 call will be available from 12:00 PM Eastern Time on April 30, 2001 until
 12:00 PM Eastern Time on May 2, 2001. The replay can be accessed by dialing
 800-633-8284, access code "18664428".
     Founded in 1960, Duane Reade is the largest drug store chain in the
 metropolitan New York City area, offering a wide variety of prescription and
 over-the-counter drugs, health and beauty care items, cosmetics, hosiery,
 greeting cards, photo supplies and photofinishing.  As of March 31, 2001, the
 Company operated 180 stores.  Duane Reade maintains a web site at
 http://www.duanereade.com.
 
     Except for historical information contained herein, the statements in this
 release and the accompanying discussion on the earnings conference call are
 forward-looking and made pursuant to the safe harbor provisions of the Private
 Securities Litigation Reform Act of 1995.  Forward-looking statements involve
 known and unknown risks and uncertainties, which may cause the Company's
 actual results in future periods to differ materially from forecasted or
 expected results.  Those risks include, among other things, the competitive
 environment in the drugstore industry in general and in the Company's specific
 market area, inflation, changes in costs of goods and services and economic
 conditions in general and in the Company's specific market area.  Those and
 other risks are more fully described in the Company's filings with the
 Securities and Exchange Commission.
 
 
                                Duane Reade Inc.
               Consolidated  Statements of Operations (Unaudited)
                    (In thousands, except per share amounts)
 
                                                        For the 13 Weeks Ended
                                                    March 31,      March 25,
                                                         2001           2000
 
     Net sales                                      $ 271,738      $ 226,275
     Cost of sales                                    206,969        171,629
 
     Gross profit                                      64,769         54,646
 
     Selling, general & administrative expenses        44,545         36,748
     Depreciation & amortization                        6,475          5,914
     Store pre-opening expenses                           495            305
                                                       51,515         42,967
 
     Operating income                                  13,254         11,679
     Interest expense, net                              8,664          8,238
 
     Income before income taxes                         4,590          3,441
     Income taxes                                       1,969          1,515
 
     Net income                                        $2,621         $1,926
 
     Net Income Per Common Share
 
       Basic                                            $0.14          $0.11
 
     Weighted average common shares
      outstanding                                      18,315         17,404
 
       Diluted                                          $0.14          $0.11
 
     Weighted average common
      shares outstanding                               19,184         18,103
 
       Cash basis (1)                                   $0.24          $0.21
 
     Weighted average common
      shares outstanding - diluted                     19,184         18,103
 
     (1)  Cash basis earnings equals net income plus tax affected amortization
          expenses.
 
 
                                Duane Reade Inc.
                          Consolidated Balance Sheets
 
                                                    March 31,   December 30,
                                                         2001           2000
                                                  (Unaudited)
 
     Current Assets
      Cash                                               $992           $979
      Receivables (1)                                  46,434         48,953
      Inventories                                     190,801        172,568
      Current Portion of Deferred Taxes                11,791         13,023
      Prepaid Expenses and Other Current Assets         6,099          8,770
         Total Current Assets                         256,117        244,293
 
     Property and Equipment, net                      114,134        107,883
     Goodwill, net                                    152,348        152,951
     Deferred Taxes                                     8,845          8,852
     Other Assets                                      59,211         56,951
         Total Assets                               $ 590,655      $ 570,930
 
     Current liabilities
      Accounts Payable                                $51,614        $47,575
      Accrued Expenses                                 26,462         28,224
      Current Portion of Senior Debt and
       Capital Leases                                  13,561         14,028
         Total Current Liabilities                     91,637         89,827
 
     Other Liabilities                                 32,598         27,633
     Long Term Debt and Capital Leases                344,307        338,973
         Total Liabilities                            468,542        456,433
 
     Total Stockholders' Equity                       122,113        114,497
 
         Total Liabilities and Stockholders' Equity $ 590,655      $ 570,930
 
     (1)   Includes Third Party Prescription Plan Receivables of $21,590 and
           $21,453, respectively.
 
 
                                Duane Reade Inc.
                                 Operating Data
                             (Dollars in thousands)
                                  (unaudited)
 
 
                                                         13 Weeks Ended
                                                    March 31,      March 25,
                                                         2001           2000
 
     EBITDA (1)                                      $ 21,119       $ 18,843
     EBITDA as a percentage of net sales                 7.8%           8.3%
     EBITDA before store pre-opening
     expenses                                        $ 21,614       $ 19,148
     EBITDA before store pre-opening
     expenses as a percentage of net sales               8.0%           8.5%
 
     Capital expenditures                             $ 9,063        $ 5,788
 
     Same store sales growth                             8.5%           8.1%
     Pharmacy same store sales growth                   16.9%          20.3%
     Pharmacy sales as a % of net sales                 37.5%          34.7%
     Third Party sales as a % of
     pharmacy sales                                     85.9%          83.7%
 
     Average weekly prescriptions
     filled per store (2)                                 976            896
 
     Number of stores at end of period                    180            153
     Retail square footage at end of period         1,289,948      1,129,621
     Average store size (sq.ft) at end of period        7,166          7,383
 
     (1)  Exclusive of other non-cash charges of $1,390 and $1,250 for the 13
          weeks ended 3/31/01 and 3/25/00, respectively.
 
     (2)  Comparative stores only, does not include new stores.
 
 
 

SOURCE Duane Reade, Inc.
    NEW YORK, April 30 /PRNewswire/ -- Duane Reade Inc. (NYSE:   DRD) today
 reported record sales and earnings for the first quarter ended March 31, 2001.
     Net sales for the first quarter were $271.7 million, a 20.1% increase over
 last year's first quarter, with pharmacy sales increasing 30.0% and
 contributing 37.5% of total sales.  Same store sales increased 8.5% over last
 year, including a 16.9% increase in pharmacy same store sales and a 4.0%
 increase in front-end same store sales.
     Net income for the quarter increased 36.1% to $2.6 million, or $0.14 per
 diluted share, compared to $1.9 million, or $0.11 per diluted share, in the
 first quarter last year.  The first quarter's net earnings were fully taxed at
 42.9% of pretax earnings compared to a 44.0% tax provision in the prior year.
     The Company opened eight new stores during the quarter compared to four
 stores in the comparable period last year.  As of March 31, 2001 the Company
 operated a total of 180 stores.
     Commenting on the Company's performance, Anthony J. Cuti, Chairman of the
 Board and Chief Executive Officer, stated, "We are especially pleased with the
 8.5% same store sales increase which was accomplished despite a challenging
 market environment and adverse weather patterns throughout the New York metro
 region.  Of particular note, during the first quarter we achieved
 exceptionally strong front-end sales as a result of our continued emphasis on
 maintaining high in-stock inventory positions and our value oriented loyalty
 card sales promotions.  Additionally, we continue to make significant progress
 with our new store growth program, opening a total of eight new stores during
 the first quarter with as many as ten additional openings scheduled during the
 first half of the year.  With these positive trends in our business, we are on
 track to achieve our sales and earnings objectives for fiscal 2001."
     Gross profit margin for the first quarter declined slightly to 23.8% of
 sales compared to 24.2% in the comparable period, due primarily to an
 increased proportion of lower margin pharmacy and third party pharmacy sales.
 Gross margin was further impacted by a comparatively mild flu season, which
 resulted in lower than normal sales of higher margin flu related generic
 prescriptions.
     Selling, general & administrative expenses increased to $44.5 million, or
 16.4% of sales, compared to $36.7 million, or 16.2% of sales, in the previous
 year. The slight increase as a percentage of sales reflects higher promotional
 costs in support of new store openings as well as increased store maintenance
 expenses associated with adverse winter weather and snow removal.
     EBITDA (earnings before interest, taxes, depreciation, amortization and
 other non-cash items) for the first quarter increased 12.1% to $21.1 million,
 or 7.8% of sales, compared to $18.8 million, or 8.3% of sales, in the previous
 year.
     Operating income increased 13.5% to $13.3 million, or 4.9% of sales,
 compared to $11.7 million, or 5.2% of sales, in the previous year.
     Income before taxes for the quarter increased 33.4% to $4.6 million, or
 $0.24 per diluted share, compared to $3.4 million, or $0.19 per diluted share,
 in the first quarter last year.
     Income taxes for the quarter amounted to $2.0 million and reflected an
 effective rate of 42.9% compared to $1.5 million and an effective rate of
 44.0% in the previous year.
     Pre-opening costs for the eight new stores amounted to $0.5 million as
 compared to $0.3 million for the four new stores opened in the previous year.
     Mr. Cuti concluded, "We are very encouraged by our performance in the
 first quarter.  Despite challenging economic conditions, we are cautiously
 optimistic about future performance.  We believe we are well positioned for
 strong growth and our financial outlook remains positive.  With respect to the
 second quarter, we anticipate revenue increases in the range of 18% to 21% and
 we currently expect diluted earnings per share of $0.36.  Looking to the
 balance of 2001, we remain confident in our ability to achieve revenue growth
 in the range of 12% to 15% over the 53 week 2000 fiscal year and net earnings
 per diluted share between $1.48 and $1.52.  These estimates for the second
 quarter and the full fiscal year exclude any potential impact from the planned
 offering of common stock announced today in a separate press release."
     The Company will hold a conference call on Monday, April 30, 2001 at
 10:00 AM Eastern Time to discuss its financial results for the first quarter
 of 2001 and to provide its outlook for the current year.  A live webcast of
 the call will be accessible from the Investor Information section of the Duane
 Reade web site (http://www.duanereade.com) and the call will be archived on
 the web site until May 13, 2001.  Additionally, a replay of the conference
 call will be available from 12:00 PM Eastern Time on April 30, 2001 until
 12:00 PM Eastern Time on May 2, 2001. The replay can be accessed by dialing
 800-633-8284, access code "18664428".
     Founded in 1960, Duane Reade is the largest drug store chain in the
 metropolitan New York City area, offering a wide variety of prescription and
 over-the-counter drugs, health and beauty care items, cosmetics, hosiery,
 greeting cards, photo supplies and photofinishing.  As of March 31, 2001, the
 Company operated 180 stores.  Duane Reade maintains a web site at
 http://www.duanereade.com.
 
     Except for historical information contained herein, the statements in this
 release and the accompanying discussion on the earnings conference call are
 forward-looking and made pursuant to the safe harbor provisions of the Private
 Securities Litigation Reform Act of 1995.  Forward-looking statements involve
 known and unknown risks and uncertainties, which may cause the Company's
 actual results in future periods to differ materially from forecasted or
 expected results.  Those risks include, among other things, the competitive
 environment in the drugstore industry in general and in the Company's specific
 market area, inflation, changes in costs of goods and services and economic
 conditions in general and in the Company's specific market area.  Those and
 other risks are more fully described in the Company's filings with the
 Securities and Exchange Commission.
 
 
                                Duane Reade Inc.
               Consolidated  Statements of Operations (Unaudited)
                    (In thousands, except per share amounts)
 
                                                        For the 13 Weeks Ended
                                                    March 31,      March 25,
                                                         2001           2000
 
     Net sales                                      $ 271,738      $ 226,275
     Cost of sales                                    206,969        171,629
 
     Gross profit                                      64,769         54,646
 
     Selling, general & administrative expenses        44,545         36,748
     Depreciation & amortization                        6,475          5,914
     Store pre-opening expenses                           495            305
                                                       51,515         42,967
 
     Operating income                                  13,254         11,679
     Interest expense, net                              8,664          8,238
 
     Income before income taxes                         4,590          3,441
     Income taxes                                       1,969          1,515
 
     Net income                                        $2,621         $1,926
 
     Net Income Per Common Share
 
       Basic                                            $0.14          $0.11
 
     Weighted average common shares
      outstanding                                      18,315         17,404
 
       Diluted                                          $0.14          $0.11
 
     Weighted average common
      shares outstanding                               19,184         18,103
 
       Cash basis (1)                                   $0.24          $0.21
 
     Weighted average common
      shares outstanding - diluted                     19,184         18,103
 
     (1)  Cash basis earnings equals net income plus tax affected amortization
          expenses.
 
 
                                Duane Reade Inc.
                          Consolidated Balance Sheets
 
                                                    March 31,   December 30,
                                                         2001           2000
                                                  (Unaudited)
 
     Current Assets
      Cash                                               $992           $979
      Receivables (1)                                  46,434         48,953
      Inventories                                     190,801        172,568
      Current Portion of Deferred Taxes                11,791         13,023
      Prepaid Expenses and Other Current Assets         6,099          8,770
         Total Current Assets                         256,117        244,293
 
     Property and Equipment, net                      114,134        107,883
     Goodwill, net                                    152,348        152,951
     Deferred Taxes                                     8,845          8,852
     Other Assets                                      59,211         56,951
         Total Assets                               $ 590,655      $ 570,930
 
     Current liabilities
      Accounts Payable                                $51,614        $47,575
      Accrued Expenses                                 26,462         28,224
      Current Portion of Senior Debt and
       Capital Leases                                  13,561         14,028
         Total Current Liabilities                     91,637         89,827
 
     Other Liabilities                                 32,598         27,633
     Long Term Debt and Capital Leases                344,307        338,973
         Total Liabilities                            468,542        456,433
 
     Total Stockholders' Equity                       122,113        114,497
 
         Total Liabilities and Stockholders' Equity $ 590,655      $ 570,930
 
     (1)   Includes Third Party Prescription Plan Receivables of $21,590 and
           $21,453, respectively.
 
 
                                Duane Reade Inc.
                                 Operating Data
                             (Dollars in thousands)
                                  (unaudited)
 
 
                                                         13 Weeks Ended
                                                    March 31,      March 25,
                                                         2001           2000
 
     EBITDA (1)                                      $ 21,119       $ 18,843
     EBITDA as a percentage of net sales                 7.8%           8.3%
     EBITDA before store pre-opening
     expenses                                        $ 21,614       $ 19,148
     EBITDA before store pre-opening
     expenses as a percentage of net sales               8.0%           8.5%
 
     Capital expenditures                             $ 9,063        $ 5,788
 
     Same store sales growth                             8.5%           8.1%
     Pharmacy same store sales growth                   16.9%          20.3%
     Pharmacy sales as a % of net sales                 37.5%          34.7%
     Third Party sales as a % of
     pharmacy sales                                     85.9%          83.7%
 
     Average weekly prescriptions
     filled per store (2)                                 976            896
 
     Number of stores at end of period                    180            153
     Retail square footage at end of period         1,289,948      1,129,621
     Average store size (sq.ft) at end of period        7,166          7,383
 
     (1)  Exclusive of other non-cash charges of $1,390 and $1,250 for the 13
          weeks ended 3/31/01 and 3/25/00, respectively.
 
     (2)  Comparative stores only, does not include new stores.
 
 
 SOURCE  Duane Reade, Inc.