Shares of drugstore chain retailer, Rite Aid Corporation (RAD) has gained approximately 4.6% since the company reported robust sales results for the month of September on Oct 2, wherein its comparable-store sales (comps) for the four weeks ended Sep 27, 2014 rose 5.1%. The improvement reflected an increase in front-end and pharmacy comps as well as higher prescription count at comparable stores.
Pharmacy comps for September were up 6.3%, which included a negative impact of nearly 225 basis points from generic drug introduction. Front-end comps improved 2.3%, while prescription count at comparable stores rose 4.4%.
Rite Aid’s total drugstore sales for the month stood at $2.022 billion, up 4.5% from the year-ago figure of $1.935 billion. Prescription sales constituted 69.5% of total drugstore sales, while third-party prescription sales accounted for 97.6% of pharmacy sales.
Further, the nation’s third-largest drugstore chain in terms of store count, following Walgreen Co. (WAG) and CVS Health Corp. (CVS), reported a 3.8% rise in comps for 30 weeks period ended on Sep 27.
Total drugstore sales for the 30 weeks period improved 3.3% to $14.924 billion against $14.449 billion in the year-ago comparable period. Prescription sales constituted 68.7% of total drugstore sales. Third-party prescription sales accounted for 97.5% of pharmacy sales.
Comparing the September sales metrics with August, we noticed that the company has witnessed a remarkable improvement in every area. In August, Rite Aid had reported a 3.9% rise in total comps, which comprised of 1.1% and 5.2% increases at front-end and pharmacy comps, respectively. Prescription counts at comparable stores were 3.7% higher from the previous-year period.
Further, Rite Aid which competes with Herbalife Ltd. (HLF) has recently posted splendid results for second-quarter fiscal 2015, wherein its top and bottom lines both came ahead of the Zacks Consensus Estimate and mark a significant year-over-year improvement.
However, we are disappointed by the company’s downbeat fiscal 2015 guidance. The company revealed that the profitability from the new generics has not met its expectations and anticipates falling profitability from generics to weigh on its pharmacy margins in the remaining period of the fiscal year. Therefore, Rite Aid trimmed its sales, adjusted EBITDA, net income and earnings per share forecasts for fiscal 2015.
Currently, Rite Aid carries a Zacks Rank #3 (Hold).
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