Drugstore chain retailer, Rite Aid Corporation’s (RAD) comparable store sales (comps) for the five weeks ended Mar 1, 2014 increased 1.5%. The growth was attributable to a rise in pharmacy comps, partly offset by decline in front-end comps.
Pharmacy comps for February were up 3.1%, which included a negative impact of nearly 138 basis points from generic drug introduction. However, front-end comps depicted a decline of 1.5%, of which 0.5% was mainly due to soft performance of flu-related over-the-counter products. The company witnessed a 1.4% decline in prescription count at comparable stores due to a 1.3% fall in flu-related prescriptions.
Rite Aid’s total drugstore sales for the month was $2.515 billion, up 2.4% from the year-ago figure of $2.457 billion. Prescription sales constituted 69.1% of total drugstore sales. Third-party prescription sales accounted for 97.3% of pharmacy sales.
For the 13-week period ended Mar 1, Rite Aid’s comps grew 2.1% primarily due to 3.5% rise in pharmacy comps, partially offset by a 0.7% drop in front-end comps. The company witnessed a 1.8% fall in prescription counts for the period.
Total drugstore sales during the quarter grew 2.2% to $6.567 billion against $6.425 billion in the year-ago comparable quarter. Prescription sales constituted 67.5% of total drugstore sales. Third-party prescription sales accounted for 97.1% of pharmacy sales.
For the 52-week period ended Mar 1, comps improved 0.7% year over year owing to 1.2% rise in pharmacy comps, partially offset by a 0.2% fall in front-end comps. The company witnessed a 0.3% fall in prescription count for the period.
Rite Aid reported total drugstore sales of $25.411 billion for the 52-week period, a 0.5% increase from the year-ago figure of $25.284 billion. Prescription sales constituted 67.9% of total drugstore sales. Third-party prescription sales accounted for 97.0% of pharmacy sales.
One of Rite Aid’s main competitors, Walgreen Co. (WAG), which is also the largest drugstore retailer in terms of store count, yesterday came up with positive comps results for February. The company recorded a rise of 4.5% in total comps mainly attributable to increases of 2% and 6.1% at its front-end and pharmacy comps, respectively. Rite Aid is the third largest drugstore retailer in terms of number of stores after Walgreen and CVS Caremark Corp. (CVS).
Rite Aid reported another month of year-over-year improvement in sales. Rite Aid’s comps came as a relief following its disappointing third-quarter fiscal 2014 results and the unfavorable outlook projected in Dec 2013.
Looking ahead, the company’s sustained focus on expanding pharmacy and clinical services through its Wellness+ customer loyalty program and remodeling of wellness stores raise our hopes. We believe that such measures will enable the company to broaden its customer base and boost top- and bottom-line performance.
Other Stocks to Consider
Rite Aid currently has a Zacks Rank #2 (Buy). Another stock that warrants a look in the drug store industry is Herbalife Ltd. (HLF), which carries the same Zacks Rank as Rite Aid.
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment