Drugstore chain retailer Rite Aid Corporation RAD reported healthy sales results for the month of July. The company’s comparable-store sales (comps) for the four weeks ended Jul 25, 2015 rose 2.4% year over year, reflecting an increase in front-end and pharmacy comps as well as rise in prescription count at comparable stores.
Pharmacy comps went up 3.4%, including a negative impact of nearly 221 basis points from generic drug introduction. Front-end comps improved 0.1% while prescription count at comparable stores inched up 0.7% year over year.
Rite Aid’s total drugstore sales for the month came in at $2.016 billion, up 2.1% from the year-ago figure of $1.975 billion. Prescription sales constituted 69.2% of total drugstore sales and third-party prescription sales accounted for 97.8% of pharmacy sales.
Year to date, this Zacks Rank #3 (Hold) stock has reported a 2.7% jump in comps for the 21 weeks ended Jul 25, 2015. Pharmacy and front-end comps for the period were up 3.7% and 0.5%, respectively, while prescription count at comparable stores rose 1.2%.
Total drugstore sales for the 21-week period improved 2.5% to $10.659 billion from $10.395 billion in the year-ago comparable period. Prescription sales constituted 69.1% of total drugstore sales. Third-party prescription sales accounted for 97.8% of pharmacy sales.
Rite Aid, which shares space with CVS Health Corp. CVS, is one of the largest drug store chains in the country. It currently operates 4,560 stores in the U.S.
Moreover, the company has been undertaking multiple strategies to drive growth such as the expansion of its pharmacy and clinical services as well as cost reduction. Further, the company has utilized additional resources, like the addition of RediClinics (a healthcare facilities provider) to its stores, inclusion of HealthSpot telehealth booths inside selected stores, its Wellness+ with Plenti program, and the Flu Immunization program to stimulate customer demand.
We believe these measures will enable the company to broaden its customer base and boost long-term profitability as well.
Some better-ranked stocks in the retail drugstore space are Diplomat Pharmacy, Inc. DPLO and Walgreens Boots Alliance, Inc. WBA. Both the stocks carry a Zacks Rank #2 (Buy).
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