Rite Aid-GNC Extend Partnership

Zacks

Drugstore chain retailer, Rite Aid Corporation (RAD) has extended its long standing partnership with GNC Holdings Inc. (GNC), a leader in healthcare product supplies, for another five years through 2019. The companies’ partnership relation in the drug business dates back to Dec 1998.

As part of the extension deal, Rite Aid will open about 300 more GNC LiveWell store-in-stores inside its stores throughout the five-year period. Rite Aid operated over 2,200 GNC store-in-stores within its countrywide stores as of Dec 19, 2013, with most of them functioning in the company’s new Rite Aid Wellness store format.

The partnership between Rite Aid and GNC is mutually beneficial as the two companies share a common objective of meeting the health and wellness needs of their customers. GNC Holdings is a leading retailer of vitamins, minerals, and herbal supplement products, sports nutrition products and diet products.

Rite Aid, which trails Walgreen Co. (WAG) and CVS Caremark Corp. (CVS) in terms of store count, continues to remodel its stores focusing on converting them into the Wellness store format in order to improve its overall store productivity. The company’s new wellness stores feature a new Vision Center, Diabetic Diagnostic Center, Men’s Grooming, Nail bar, Hair care aisle, Grab and go cooler and so on, thus, luring customers to spend more time on selecting their personal care products and thereby enabling the company to generate increased sales.

During the third quarter, Rite Aid completed renovation at 94 outlets, while it relocated 4 stores. Since the start of its wellness program at the end of the third quarter, the company accomplished wellness remodels at about 1,117 stores. As of Nov 30, 2013, Rite Aid operated 4,595 stores across 31 states and the District of Columbia.

Currently, Rite Aid carries a Zacks Rank #3 (Hold).

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