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Rite Aid Expands in Northeast With Thrifty Ice Cream Brand

Zacks Equity Research

Rite Aid Corporation RAD recently announced the expansion of its premium Thrifty Ice Cream brand in select stores in Delaware, New York, Maryland, New Jersey and Pennsylvania. Available in 48-ounce containers, customers will have about eight different ice cream flavors to pick from.

This ice cream brand is currently available in 23 flavors across California. Notably, the Thrifty Ice Cream tradition started in 1940 when its production plant was introduced in Hollywood, CA. This award-winning brand is made with Real California Milk to bring one-of-a-kind ice cream experience to its customers.

Rite Aid Focuses on Omni-Channel Growth

Concurrent to expansion of product categories, Rite Aid is enhancing home delivery through its partnership with Instacart as part of its initiatives to boost customer experience. The company also remains encouraged to partner with Amazon AMZN to bring Amazon Lockers in roughly 900 Rite Aid stores. This service will allow customers to pick-up or return their Amazon packages. Recently, Rite Aid inked a partnership deal with Adobe to enhance digital solutions and marketing capabilities. This move is expected to improve customer analytics, content management and real-time personalization.

Rite Aid has also shifted e-commerce fulfillment from a third-party provider to its own distribution network. This has reduced fulfillment lead time, lowered cost and helped increase online offering by 25%. Further, the company’s own brand program is supporting efforts to build tailored offerings that are specific to each local market. Backed by all these efforts, the company should strengthen its omni-channel capabilities and provide increased convenience and value to customers.

Furthermore, the company renewed its drug purchasing agreement with McKesson Corporation MCK, which will extend for another 10 years. As part of the agreement, McKesson will continue providing Rite Aid with sourcing and direct-to-store delivery for branded and generic pharmaceutical products through March 2029. The partnership will provide Rite Aid with a combination of competitive drug pricing and operational flexibility. This extension also represents a key step toward strengthening the pharmacy business, with continued focus on improving access to preferred and limited networks and executing key script growth initiatives.

Price Performance

Despite these positives, shares of Rite Aid have lost 20.7% against the industry’s 0.2% growth in the past three months. The downside can be attributed to the company’s first-quarter fiscal 2020 results, wherein it incurred loss. Persistent weakness in the Retail Pharmacy segment also affected its performance.


 

Nevertheless, Rite Aid, which shares space with Herbalife Nutrition Ltd. HLF, has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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