Phar-Mor

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Phar-Mor
Image:Phar-morlogo.PNG
Type of Company Pharmacy (Defunct)
Founded Youngstown, Ohio
Headquarters Youngstown, Ohio
Key people Michael I. Monus
Industry Retail
Products Pharmacy, Liquor, Cosmetics, Health and Beauty Aids, General Merchandise, Snacks, 1 Hour Photo
Employees None (formerly 25,000)
Website None

Phar-Mor was a U.S. chain of discount drug stores, based in Youngstown, Ohio, and founded by Michael I. Monus (usually called Mickey Monus) and David S. Shapira in 1982. Some of its stores used the names Pharmhouse and Rx Place. Low prices were advertised to bring in a large volume of sales with the slogan "Phar-Mor power buying gives you Phar Mor buying power" (apparently Phar Mor was a pun for "far more"). An orange color was used for much of its decor.

[edit] Bankruptcy

In 1992, when the company had grown to over 300 stores and 25,000 employees, Monus and his CFO Patrick Finn were accused of embezzlement: they had allegedly hidden losses and moved about $10 million from Phar-Mor to the World Basketball League that Monus had founded. Based on deceptive data and inventory, Phar-Mor borrowed multi-millions from banks and similar institutions under the premise of financing its unusually rapid growth. In actuality, this infusion of cash was necessary to pay off suppliers. As a result, Phar-Mor had to file for bankruptcy protection, closed 55 stores and fired 5,000 employees. Finn testified against Monus and received 33 months in prison. Monus' first trial ended in a hung jury in 1994; he was convicted at the second trial on 109 federal counts, mostly related to fraud, and sentenced to 19 years and 7 months in federal prison. Prosecutors estimated that the total loss to all investors exceeded $1 billion. The sentence was appealed and later reduced to 11 years. Monus was fired from his position as COO of Phar-Mor.

One friend of Monus later admitted to having offered a bribe to an acquaintance of his on the first trial's jury; the juror had not taken the money but confirmed the scheme. Monus was tried for jury tampering and acquitted.

Several investors in Phar-Mor filed a civil suit against the company's auditors, Coopers & Lybrand. A jury decided in 1996 that the accountants had been negligent.

Phar-Mor emerged from bankruptcy protection in 1995, having lost two thirds of its stores. It went out of business in 2002.

[edit] Phar-Mor's philosophy

Phar-Mor had a simple philosophy. Buy a nominal variety of product in any given category, and buy it in huge bulk. This enabled them to battle Wal-Mart head to head in many areas. Phar-Mor's business model was based on moving a huge quantity of merchandise with a very small profit margin. Many products were shipped via DSD (Direct Store Delivery), but some was shipped through Tamco warehouses, which Phar-Mor later purchased.

A standard back room was the size of a very small strip mall shop and usually packed to the brim with merchandise. When the company ran into financial difficulty, backrooms were ordered to be emptied, and all merchandise was to hit the salesfloor immediately.

[edit] Sources

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