As published in Toledo Business Journal - June 1, 2018

Walgreens’ distribution center in Perrysburg Township

Walgreens’ distribution center in Perrysburg Township

Walgreens expansion in Perrysburg Twp

Addition to distribution center will increase facility to over 1M SF

Walgreen Company, a drug retailing chain in the US, is planning to expand its Perrysburg Township warehousing and distribution center by adding an additional 380,000 square feet to its existing 650,000 square foot facility along State Route 795 and Oregon Road.

The expanded 1,030,000 square foot distribution center is expected to bring in approximately 350 new jobs over time.

Construction on the project is expected to begin in the early summer and is expected to be complete by spring of 2019. The facility, according to the company, will remain fully operational during the expansion.

Edwardsville, Illinois-based Contegra Construction Co. is the general contractor with Highland, Illinois-based Formation Architects, Inc. and St. Louis, Missouri-based M+H Architects serving as the architects for the project.

Phil Caruso, media relations for Walgreens, said, “This expansion allows us to meet the current and future needs of our business and better positions us to deliver more products to more stores.”

The Ohio Tax Credit Authority approved a 1.741%, nine-year tax credit to the company for the creation of $15,404,480 in new annual payroll as a result of the project. As part of the tax credit agreement, the Ohio Tax Credit Authority requires Walgreens to maintain operations at the project location for at least 12 years. Ohio was competing with Illinois and Wisconsin for the proposed project.

Also, according to the company, at of the end of its second fiscal quarter, Walgreens acquired 1,542 Rite Aid stores under the previously announced amended and restated asset purchase agreement. Since the end of the quarter, the company completed the acquisition of all 1,932 stores. The transition of three distribution centers and related inventory is expected to begin during fiscal 2019.

The company continues to expect to complete integration of the acquired stores and related assets by the end of fiscal 2020, as previously announced.

As part of a program to optimize locations, Walgreens continues to expect to close approximately 600 stores and related assets over an 18-month period, resulting in estimated pre-tax charges to the company’s GAAP financial results of approximately $450 million. This program commenced in March. Cost savings from the program are still anticipated to be approximately $300 million per year and are expected to be fully delivered by the end of fiscal 2020.

The Perrysburg Township warehousing and distribution center originally opened in the spring of 2003 as part of a $380 million investment. The goal, according to Michael Polzin, a company spokesman who spoke with the Toledo Business Journal at that time, was to serve Ohio, Michigan, parts of Indiana, and possibly parts of Kentucky.

A Walgreens retail store located on the corner of Reynolds Road and Southwyck Boulevard

He said, “We’re looking to serve a growing store base – not only in Ohio, but also in Michigan, particularly in Detroit. That’s a market we’ve just entered in the last three years and it is growing rapidly. Cleveland and northeast Ohio is a market we entered about five years ago; we’ve also seen a lot of growth in that area.”

At the time of the original construction of the facility, the company had about 3,100 drugstores in the US. Today, it has around 8,100 stores, including 249 in Ohio, 227 in Michigan, 190 in Indiana, and 95 in Kentucky – serving eight million people in its stores, online at Walgreens.com, or through its mobile app, according to information from the company.

Polzin also noted in that interview that automation would be a key element in the facility. Polzin explained, “We have a very sophisticated computer-driven automated storage and retrieval system. Using a very complex conveying system, we use bar coding technology to move cases from one spot to another… Our inventory management system connects our stores and our distribution centers. We have an automated reorder system. Of course, a store manager can adjust his order as he feels is necessary, but we do make use of an automated reorder system.”

As noted by the State of Ohio, the current project involves integrating distribution and supply chain operations. The company’s fixed asset investment is going towards the construction of a new building, expansion of the existing building, and investment in new machinery / equipment.

The company has 15 warehousing and distribution centers within the United States and Puerto Rico, including Perrysburg Township; Moreno Valley and Woodland, California; Windsor, Connecticut; Jupiter and Orlando, Florida; Pendergrass, Georgia; Bolingbrook, Edwardsville, and Mt. Vernon, Illinois; Valparaiso, Indiana; Swedesboro, New Jersey; Easton, Pennsylvania; Carolina, Puerto Rico; Anderson, South Carolina; Houston and Waxahachie, Texas; and Windsor, Wisconsin.

Walgreens is expected to begin integrating the three acquired distribution centers from Rite Aid – located in Dayville, Connecticut; Philadelphia, Pennsylvania; and Spartanburg, South Carolina – during fiscal 2019.

 

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