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After Wal-Mart Blow, Kodak Putting Name Back on U.S. Storefronts

August 8, 1996

ROCHESTER, N.Y. (AP) _ A month after Japanese arch-rival Fuji snatched Wal-Mart’s photofinishing business, Eastman Kodak Co. said Thursday it is hanging its shingle on American storefronts for the first time in decades.

Kodak said Thursday it is paying $56.1 million for a 51 percent stake in Fox Photo Inc., the nation’s largest photo specialty retailer with 555 photofinishing minilabs and stores selling cameras, film and accessories.

A subsidiary of St. Louis-based CPI Corp., Fox Photo outlets use the Fox Photo, CPI Photo and Proex names. Under the joint venture, expected to be finalized within months, the Kodak name would be incorporated in some way yet to be decided.

The Fox stores will serve as a test market for elevating Kodak’s name. In time, the emblem will be licensed out to other U.S. retailers, such as camera stores, pharmacies and mass-merchandisers.

``It is consistent with our strategy of emphasizing our brand with the consumer and helping the retailer tie into that brand,″ said Jerome W. Johnson, Kodak’s general manager of consumer imaging in North America.

Kodak didn’t specify why it’s taking the step now, but the timing is intriguing.

Last month, Tokyo-based Fuji agreed to buy the photofinishing operations of Wal-Mart Stores Inc., the largest U.S. provider of photofinishing services, for up to $600 million. Fuji replaced Kodak as supplier of paper for Wal-Mart’s 1,200 in-store labs.

From the 1940s through the mid-1960s, Kodak operated as many as 45 Kodak Stores in the United States. ``They weren’t that sophisticated _ almost like an extension of our distribution and warehouse network,″ said Kodak spokesman Charlie Smith.

The new strategy, he said, involves ``not just putting a name on the front of the store _ it would be better merchandising inside the store, new displays, better-trained sales staff.″

Overseas, notably in Australia, Southeast Asia and Europe, the Kodak name appears on 16,000 photo outlets, most owned by independent retailers who license from Kodak.

Kodak’s thrust into the retail market _ its Qualex subsidiary already dominates the nation’s wholesale photofinishing business _ coincides with the arrival of more complex photographic products, such as digital cameras and scanners.

This year, in conjunction with Fuji, Canon, Minolta and Nikon, Kodak started selling a new line of cameras and film combining digital and traditional technology that requires new photofinishing systems.

Because of the high cost of upgrading equipment, many retailers are farming out their photofinishing business to the photographic giants.

CPI’s chairman and chief executive, Alyn V. Essman, will be named chairman of the joint venture. Fox Photo President Ted deBuhr will be chief executive.

Excluded from the deal will be more than 1,000 portrait studios operated by CPI in Sears department stores across North America and its 150 Prints Plus home decor stores.

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