Kodak Buying Stake in Fox Photo

A month after Japanese archrival Fuji Photo Film Co. snatched Wal-Mart Stores Inc.’s photofinishing business, Eastman Kodak Co. said it will hang its shingle on American storefronts for the first time in decades.

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

Outlets of Fox Photo, a subsidiary of St. Louis-based CPI Corp., use the Fox Photo, CPI Photo and Proex names. Under the joint venture, expected to be finalized within months, the Kodak name will be incorporated in a 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, the largest U.S. provider of photofinishing services, for as much as $600 million. Fuji replaced Kodak as the supplier of paper for Wal-Mart’s 1,200 in-store labs.

From the 1940s through the mid-’60s, Kodak operated as many as 45 Kodak Stores in the U.S. “They weren’t that sophisticated--almost like an extension of our distribution and warehouse network,” spokesman Charlie Smith said.

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.”