FINANCE

CVS, Texas Settle Over Record Dumping

BY CSA STAFF

Houston CVS Caremark Corp. will overhaul its information security system and pay the state of Texas $315,000 to settle a lawsuit that accused the drugstore operator of dumping credit-card numbers, medical information and other material from more than 1,000 customers into a garbage container.

Texas Attorney General Greg Abbott, who sued CVS last April, announced the agreement Wednesday.

CVS Caremark was accused of failing to protect its customers from identity theft at a store in Liberty, about 45 miles northeast of Houston.

Records allegedly dumped by employees behind the store included credit- and debit-card numbers and prescription forms that contained customers’ names, addresses, dates of birth and types of medications, Abbott said.

CVS’s revamped information-security program must have administrative, technical and physical safeguards designed to protect the personal information of customers. It also must create a training program to inform new hires of its enhanced security procedures and conduct unannounced compliance checks at some stores, among other measures.

In a statement, CVS said it was pleased to reach the settlement agreement.

“Nothing is more central to our health-care operations than maintaining the privacy of health information,” the statement said. “We have firm policies in place at all 6,200 of our stores designed to protect patient privacy in our pharmacies, including procedures to ensure that all waste material containing personal-identifying information is securely disposed.”

The company said the files were dumped during the Liberty store’s relocation to a new site. The files were contained to a “single, secured bag.”

“However, the improper disposal of this information was a violation of our record retention and privacy policies, and CVS took appropriate disciplinary action,” the statement said. When the suit was filed last year, CVS said the store manager had been fired.

Earlier this month, CVS Caremark agreed to pay almost $37 million to nearly two dozen states and the federal government to settle claims it billed Medicaid programs for a more expensive formulation of an antacid.

The settlement in the case—the first of its kind for a retail pharmacy company—came after a lengthy investigation that began in 2001, when a suburban Chicago pharmacist alerted authorities.

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Pep Boys posts 4Q sales loss

BY CSA STAFF

PHILADELPHIA The Pep Boys announced that sales for the fourth quarter ended Feb. 2 were $517.6 million, as compared to the $578 million recorded for the fourth quarter ended February 3, 2007. Excluding the 14th week of fourth quarter 2006, comparable-merchandise sales decreased 4.4% and comparable-service revenue decreased 1%.

The company reported a fourth quarter net loss of $18.5 million, or 36 cents per share – basic and diluted, from net earning of $7.9 million, or 15 cents per share – basic and diluted, for the same period last year. According to Pep Boys, the net loss included $8.5 million of margin reductions related to the exiting of non-core merchandise, $6.2 million in store closure costs and $6 million in debt pre-payment costs.

Sales for the fiscal year ended Feb. 2 were $2.14 billion as compared to the $2.24 billion recorded last year. Excluding the 53rd week of 2006, comparable-merchandise sales decreased 4.2% and comparable-service revenue increased 1.8%.

Net loss increased from $7.07 million, or 13 cents per share – basic and diluted, to  $37.4 million, or 72 cents per share – basic and diluted. 

President and ceo Jeff Rachor commented, “While the difficult economic backdrop created sales challenges during the fourth quarter, we are pleased to confirm that our progress to date leaves us well positioned to complete this first important step in our strategic plan by the beginning of the second quarter of this year.

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ALDI launches ‘smart’ ad campaign

BY CSA STAFF

NEW YORK ALDI has launched a new television campaign in the United States.

The four commercials center on the themes of “musical,” “soccer mom,” “extended family” and “dinner party.” Each one presents a different scenario, i.e. shopping for a big family, or putting together the perfect dinner party, and ties into the ALDI motto of “shopping smart.”

The commercials can be viewed on ALDI’s Web site.

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