Shares of Rite Aid Corporation (RAD) have climbed 1.5% since the drugstore chain retailer came up with solid sales results for Dec 2014. The company’s comparable-store sales (comps) for the four weeks ended Dec 27 rose 5.3%. The improvement reflected an increase in front-end and pharmacy comps as well as higher prescription count at comparable stores.
Pharmacy comps were up 7.3% that included a negative impact of nearly 123 basis points from generic drug introduction. Front-end comps climbed 1.7%, while prescription count at comparable stores improved 5.1%.
Rite Aid’s total drugstore sales stood at $2.212 billion, up 4.9% from the year-ago figure of $2.109 billion. Prescription sales constituted 64.8% of total drugstore sales, while third-party prescription sales accounted for 97.6% of pharmacy sales.
Further, the Zacks Rank #2 (Buy) company reported a 4.3% rise in comps for the 43-week period ended Dec 27. Pharmacy and front-end comps for the period were up 5.9% and 1%, respectively, while prescription count at comparable stores rose 3.6%.
Total drugstore sales for the 43-week period improved 3.9% to $21.762 billion against $20.953 billion reported in the year-ago comparable period. Prescription sales constituted 68.6% of total drugstore sales. Third-party prescription sales accounted for 97.5% of pharmacy sales.
Rite Aid, which competes with Herbalife Ltd. (HLF), has been riding on the success of its Health Alliance Program, which commenced in Mar 2014. Through this, the company works with different healthcare providers to offer holistic care to patients suffering from chronic or poly-chronic health problems. Rite Aid has been aggressively focusing on the expansion of the Health Alliance Program across all its stores to improve both customer traffic and top line.
Moreover, Rite Aid is committed toward expanding its business and market share through alliances and lucrative acquisition opportunities, as is evident from its partnerships with GNC Holdings Inc. and RediClinic. These collaborations form part of the company’s strategic initiatives directed toward enhancing top and bottom lines.
We believe that these constant endeavors, along with its spectacular sales results, have been growth drivers for the company, which is the nation’s third-largest drugstore chain in terms of store count, following Walgreens Boots Alliance, Inc. (WBA) and CVS Health Corporation (CVS).
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