Drugstore chain Rite Aid Corporation (RAD) reported a same-store sales (comps) increase of 1.1% for the five-week period ended June 2, 2012. The increase was driven by strong front-end, pharmacy and prescription count comps for the month. Front-end same-store sales for May 2012 increased 1.3%, while pharmacy comps were up 1.0%. Prescription count at comparable stores witnessed an upside of 2.6%.
Pharmacy comps for May included a negative impact of around 406 basis points from new generic introductions.
Rite Aid reported total drugstore sales of $2.454 billion in May, with prescription sales accounting for 68.2% of drugstore sales and third-party prescription sales making up for 96.6% of pharmacy sales. The company’s May sales represented a 0.3% rise from the year-ago level of $2.446 billion.
For the 13-week period ended June 2, 2012, Rite Aid registered a comps increase of 2.5%. Comps for the period comprised 2.7% rise in front-end comps and 2.4% increase in pharmacy comps. Prescription count at comparable stores spiked 3.0% for the quarter.
Total drugstore sales of $6.441 billion for the quarter reflected a 1.8% increase from $6.329 billion reported in the year-ago period. Sales for the 13-week period included a 68.4% contribution from prescription sales with third-party prescription sales making up for 96.6% of pharmacy sales.
In an effort to expand its pharmacy and clinical services, Rite Aid has applied additional resources, such as Wellness+ program for diabetes and Flu Immunization program. We believe these programs will enable the company to increase its customer base as well as long-term profitability.
Moreover, the company is in the process of various cost-cutting initiatives including centralized indirect procurement of drugs, administrative headcounts requirement, reducing supply chain costs, reducing debt, etc., which will certainly benefit the company to improve its bottom line.
Headquartered in Camp Hill, Pennsylvania, Rite Aid is the third largest retail drugstore in the U.S. based on revenues and number of stores. The company operates in 31 states across the country and in the District of Columbia. As of June 2, 2012, the company operated 4,652 stores versus 4,704 stores in the same period last year.
Rite Aid, which competes with CVS Caremark Corporation (CVS) and Walgreen Co. (WAG), currently, holds a Zacks #2 Rank, implying a short-term Buy rating on the stock. The company retains a long-term Neutral recommendation on the stock.
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