Phar-Mor

Phar-Mor

File:Phar-Mor logo.svg Logo used from 1986-1999
Company type	Public (formerly)
Industry	Retail (drugstore)
Founded	1982 (1982)
Founder	Michael "Mickey" Monus, David Shapira
Defunct	2002 (2002)
Fate	Liquidation after bankruptcy
Headquarters	Youngstown , United States
Area served	United States
Key people	Michael "Mickey" Monus (founder), Patrick Finn (CFO)
Products	Discount pharmacy and retail products
Number of employees	25,000 (1992)

Phar-Mor (branded as Template:Proper name) was a discount drugstore chain operating in the United States, headquartered in Youngstown, Ohio. Established in 1982 by entrepreneurs Michael "Mickey" Monus and David Shapira, the company also operated under the names Pharmhouse and Rx Place, the latter acquired from the F.W. Woolworth Company during the mid-1990s. The chain promoted low pricing strategies aimed at driving high sales volumes, utilizing slogans such as "Phar-Mor power buying gives you Phar-Mor buying power," "Phar-Mor For Less," and in television advertisements, "Power buying saves: Save at Phar-Mor."

In 1996, the regional discount retailer ShopKo, based in Green Bay, Wisconsin, declared intentions to merge with Phar-Mor. However, this proposed merger was abandoned a year later due to unresolved conflicts between the companies.

Business model

Phar-Mor operated on a strategy of high sales volume combined with minimal profit margins. While a significant portion of its inventory was delivered directly to individual stores, some products were distributed through Tamco warehouses—a company Phar-Mor eventually acquired.

File:Phar-Mor - 1986.svg

Logo used from 1986-1999

Retail pioneer Sam Walton once remarked that Monus was the only competitor he feared, expressing bewilderment at Phar-Mor’s rapid expansion within a brief period.

Bankruptcy

By 1992, Phar-Mor had expanded to over 300 outlets and employed approximately 25,000 individuals. During this period, founder Monus and his Chief Financial Officer Patrick Finn faced allegations of embezzlement. They were accused of concealing financial losses and diverting nearly $10 million (equivalent to about $Template:Format price in Template:Inflation/year) from Phar-Mor funds to support the World Basketball League, an organization established by Monus. Phar-Mor secured millions in loans based on misleading financial statements and inventory records, purportedly to support its rapid expansion. However, these funds were primarily used to settle outstanding supplier debts. Consequently, the company sought bankruptcy protection, shuttered 55 locations, and dismissed 5,000 workers. Finn cooperated with prosecutors and received a 33-month prison sentence. Monus' initial trial in 1994 ended with a deadlocked jury; however, he was later convicted on 107 federal charges related mostly to fraud and sentenced to 17 years and 7 months' incarceration. Authorities estimated investor losses exceeded $1 billion. His sentence was subsequently appealed and reduced to nine years.

In a related development, several Phar-Mor investors initiated a civil lawsuit against the auditing firm Coopers & Lybrand. In 1996, a jury found the auditors guilty of both common law and federal securities fraud for falsely claiming adherence to Generally Accepted Auditing Standards (GAAS) while failing to conduct proper audits.

Phar-Mor exited bankruptcy in January 1995 with 143 stores remaining operational. Nevertheless, the company soon struggled against intensified competition from major retailers like Wal-Mart and Target, both of which began launching stores equipped with pharmacy services. Unable to withstand this pressure, Phar-Mor filed for bankruptcy again in September 2001—just over six years after emerging from its prior three-year bankruptcy period. The company was removed from the NASDAQ Stock Market on October 10, 2001.

During its final operational years, Phar-Mor's position weakened further. Attempts to reinstate its Power Buying strategy proved unsuccessful. Without this competitive advantage, Phar-Mor directly competed with chains such as CVS and Walgreens but suffered due to their more convenient store locations. The second bankruptcy ultimately led to complete liquidation.

In July 2002, a judge in Youngstown authorized the sale of Phar-Mor Inc.'s assets and inventory valued at $141 million (~$Template:Format price in Template:Inflation/year). Closing sales commenced across the remaining 73 stores. The liquidation process was managed by The Ozer Group based in Needham, Massachusetts, alongside Hilco Merchant Resources from Northbrook, Illinois. Assets located in the Youngstown region were acquired by Giant Eagle through bankruptcy proceedings.

Phar-Mor's downfall was documented in an episode of the PBS series Frontline titled "How to Steal $500 Million."

Eventually, the Youngstown-area stores were sold to Marc's, another discount grocery and drugstore chain.

References

• Marianne M. Jennings: "Phar-mor and Michael Monus"
• Marylynne Pitz: "Jury finds Phar-Mor's auditors negligent", Pittsburgh Post-Gazette, 15 February 1996
• "Appeals court rejects convicted executive's request for new trial", The Associated Press, 26 January 2004
• United States v. Monus, appellate court ruling from 1997
• Marcus Gleisser: "Not-guilty vote worth $50,000", Plain Dealer (Cleveland, Ohio), 4 March 1998