Rite Aid's (RAD) Key Sales Metrics for October Rise 5.5%
Drugstore chain retailer, Rite Aid Corporation (RAD) came up with robust sales results for the month of October. The company’s comparable-store sales (comps) for the four weeks ended Oct 25, 2014 rose 5.5%. The improvement reflected an increase in front-end and pharmacy comps as well as higher prescription count at comparable stores.
Pharmacy comps for October were up 7.1%, which included a negative impact of nearly 228 basis points from generic drug introduction. Front-end comps improved 2%, while prescription count at comparable stores rose 4.9%.
Rite Aid’s total drugstore sales for the month stood at $2.058 billion, up 5% from the year-ago figure of $1.961 billion. Prescription sales constituted 70.1% of total drugstore sales, while third-party prescription sales accounted for 97.5% 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 4% rise in comps for the 34 weeks period ended on Oct 25. Pharmacy and front-end comps for the period were up 5.4% and 0.9%, respectively, while prescription count at comparable stores rose 3.4%.
Total drugstore sales for the 34 weeks period improved 3.5% to $16.982 billion against $16.410 billion in the year-ago comparable period. Prescription sales constituted 68.9% of total drugstore sales. Third-party prescription sales accounted for 97.5% of pharmacy sales.
Comparing the October sales metrics with September, we noticed that the company has witnessed a remarkable improvement in every area except front-end comps. In September, Rite Aid had reported a 5.1% rise in total comps, comprising 2.3% and 6.3% increases at front-end and pharmacy comps, respectively. Prescription counts at comparable stores were 4.4% higher from the previous-year period.
The company’s improving sales trends helped it to post splendid results for second-quarter fiscal 2015 on Sep 18, 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 which competes with Herbalife Ltd. (HLF) 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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