The drugstore chain has been talking with foodmakers including Unilever NV, Nestle SA and Sara Lee Corp. about creating private-label and branded products, said Bryan Pugh, vice president of merchandising.

"Everyone is time-starved and we have the most convenient 7,000 locations in the U.S.," Pugh said in a Jan. 11 telephone interview. "They're on-the-way-home destinations that are easy to get in and out of and will provide a good value." He declined to say when the project will be implemented or how much it costs. Walgreen, based in Deerfield, Illinois, must sort out supply and distribution issues and test in some markets before introducing freshly prepared foods such as salads, cut fruits, ready-to-bake pizzas and sandwiches into more stores, he said.

The goal of the program, along with the sale of beer and private-label wine, is to boost revenue, Pugh said. Same-store sales declined in November and December as 10 percent unemployment and falling home values blunted consumer spending. "If they can get consumer acceptance, this would be good for sales," said Andrew Wolf, a Richmond, Virginia-based analyst with BB&T Capital Markets, which recommends that investors buy the shares. "Consumers aren't used to buying salads from a drugstore chain. That would have to change."

Walgreen and CVS Caremark Corp. (CVS), both with more than 6,900 stores, are locked in a battle for supremacy in the retail drug market. CVS, whose retail sales are below Walgreen's, operates in 44 states and the District of Columbia.

The Alaska store, in Gov. Sarah Palin's hometown of Wasilla, will be the only 24-hour pharmacy in the state, Walgreen said. Two locations in Anchorage will follow in August. All three stores will offer local products and amenities to make shopping easier in cold weather.

"With an aging population and baby boomers in their 60s, Alaska's demand for pharmacy services is growing every year," said Bruce Philipp, Walgreen district manager for Alaska.

Walgreens also expects to complete transactions for two additional Drug Fair locations in the upcoming weeks, according to the $59 billion drugstore chain. "Over the next few weeks, the stores will be remerchandised and refreshed, incorporating new signage and displays, as well as exclusive products including the...Walgreens brand," stated the retailer, which operates 6,783 drugstores.

The company also revealed Monday that one of its largest retail customers, which accounted for 15.8 percent of its gross sales last year, decided in April to discontinue Physicians Formula at its stores in 2010. Jackel declined to name the retailer, but told WWD the discontinuance was a surprise. "All our accounts are very sophisticated, and so are we, in measuring performance year-over-year," she said. "If you look at sheer performance, there is no reason that you wouldn't want us in your stores."

Although Jackel declined to name the retailer in question, reports have been circulating in the market that Walgreens was on the verge of dropping Physicians Formula. Visits to some stores revealed that the line was being marked down considerably. A spokeswoman at Walgreens could not be reached for comment at press time.

The offer, which comes more than a year into the recession, only applies to adults who lose their jobs on or after March 31. Spouses, domestic partners and children also qualify if they do not have their own health insurance.

The plan only applies to someone who has already paid for a visit to one of the Take Care clinics. A typical visit to one of the clinics, which treat minor ailments such as colds, usually costs $59 or more for patients with no insurance.

The plan seems to be "a rather expensive way to drive awareness of the company's in-store healthcare clinics," said Pali Research analyst Robert Summers.

He noted the cost of the program would only rise as unemployment continues to grow.

On Tuesday, 47 people were fired at the company's corporate offices and pharmacists were notified at stores that Walgreens intends to close. Drug Fair stores in Raritan and Rockaway were closed last weekend.

"These challenging economic times have affected all of our families, our friends and our patients in some manner,'' Drug Fair Chief Executive Tim LaBeau said in the memo. "As you have been well aware, our company too has been struggling to maintain its viability."

"After a great deal of searching, we have decided to enter into an agreement to sell most of the Drug Fair business, including the majority of our stores, to Walgreens."