Penney Could Sell off Eckerd Drug

May 23, 2001 9:30 PM  By

Dallas—J.C. Penney may either sell off or plan an initial public offering for its Eckerd drugstore chain during the next two or three years, according to recent analysts reports. Eckerd has dragged down Penney’s earnings recently, and analysts say that selling it or spinning it off would enable Penney to focus on its mainline catalog/retail businesses.

Already, Penney has agreed to sell its J.C. Penney Direct Marketing Services unit to insurer Aegon NV of the Netherlands. That sale is expected to close by the end of the second quarter and to generate after-tax cash proceeds of about $1.1 billion.

J.C. Penney bought the 2,650-store Eckerd chain in 1996, but sales at the drug retailer declined after the acquisition as it lost customers to bigger rivals amid internal management problems, according to Reuters.