Phar-Mor led the way for failure
Helen Zavasky and Harriet Lee weren't dwelling on the legacy about to be left by Phar-Mor. The Squirrel Hill women were instead considering the merits of a particular hue of hair coloring.
Holding a box of dye uncertainly, Lee said to Zavasky, "It says 'Intense Auburn.' What does that mean, 'intense?' I don't want to come out looking all orange."
Zavasky shrugged. Lee pondered. This was Friday morning, halfway down aisle six at the Edgewood Towne Center Phar-Mor. The discount drug store chain's once-bright future was marked down to zero Wednesday — thanks largely to the criminal activity in its past.
Under a bankruptcy court agreement, the company's remaining 73 stores will close and their inventory sold off. Four thousand jobs will be lost. The Phar-Mor name, once ubiquitous in the tri-state area, soon will be consigned to the bargain bin of our collective memory.
It's an inglorious end to a company Wal-Mart founder Sam Walton once told The Wall Street Journal he feared as the greatest threat to his own retail empire. A company ahead of its time. Not merely in the way it marketed merchandise, but also in the manner in which its top executives employed accounting practices like a back-alley bandit employs a handgun.
Within a decade of its founding in 1982, the Youngstown-based Phar-Mor chain had more than 300 stores operating in nearly every state. Other discount retailers were left scratching their heads wondering how Phar-Mor was able to simultaneously undercut prices, rapidly expand and still turn a profit.
The answer, it turned out, was simple. Phar-Mor founder Michael "Mickey" Monus cooked the books as effortlessly as Julia Child cooks a delectable shrimp quiche (her secret, and don't tell her I told you, is to boil the quarter cup of dry white vermouth for just over 30 seconds).
"Power Buying" was Phar-Mor's phenomenally successful advertising slogan. "Power Lying" was the phenomenally profitable bookkeeping dictum Monus and other company bigwigs practiced.
A billion-dollar fraud and embezzlement scheme forced Phar-Mor into its initial bankruptcy in 1992. By the time it emerged from bankruptcy in 1995, the chain had 200 fewer stores and Monus had taken the express line to federal prison.
The chain never fully recovered from its Monus-induced maladies and declared Chapter 11 reorganizational bankruptcy in September. But with its prospects for recovery dim, the chain decided last month that liquidation was its only option.
Lee had far more hair coloring options yesterday. While she mulled them, Zavasky said she will miss Phar-Mor. "This is a one-of-a-kind store and you can't beat the prices. It's too bad they're going out of business," she said.
Lee finally opted for a lighter shade of auburn. Something not so intense. A short time later, she and Zavasky were out the door, a door soon permanently shut.
It's unfortunate the chain is closing, but I think its scandalous past played an important part in inspiring modern corporate corruption. Phar-Mor showed just how far a company can go with a little hard work, dishonest leadership and accommodating accounting practices.
I don't believe it's a stretch to suggest that the recent indiscretions of Enron, WorldCom and a host of other troubled companies may not have occurred if not the infamous example set by this dying regional retailer.
Its place in history is secure. Do no power crying for Phar-Mor.
