Drug store chains don’t crank out a lot of consumer electronics dollars, report says
NEW YORK Drug store chains’ foray into the consumer electronics game isn’t sizing up, according to TWICE, a NewBay Media publication.
The magazine, which examines the world of consumer electronics, conducted research with market intelligence partner The Stevenson Co. to examine CE sales at drug store chains. The study found that CE sales for Walgreens, CVS/pharmacy and Rite Aid totaled $111 million last year, about 1% of CE revenue garnered by the industry’s top 100 retailers, TWICE said.
Most drug store chains sell such CE items as batteries and flashlights, as well as photo, mobile and computer accessories. But while front-end revenue for drug stores trails behind prescription revenue, TWICE pointed out that drug stores soon may profit from a pending CE boom with the introduction of such innovative products as digital health-and-wellness items and more.
Kodak to implement PYNK system at CVS/pharmacy stores nationwide
ROCHESTER, N.Y. Eastman Kodak Co. has announced that CVS/pharmacy is offering the new Kodak PYNK smart print system, which is a new concept in premium photo products.
CVS/pharmacy will begin wide-scale installations in 5,000 of its U.S. retail locations in early December. Kodak expected to complete the PYNK system rollout for CVS/pharmacy in time for the holiday gifting season.
PYNK is a patent-pending technology that marries photos to the "photo holder." Kodak has created a "print to fit system" that breaks down design barriers and makes both printing and framing a matter of a few button presses. The PYNK system gives consumers professional-looking, framed collages in seconds at any PYNK-ready Kodak picture kiosk. There’s no need for cropping, cutting, laying out and taping photos, according to Kodak — Kodak’s intelligent software does it all at the kiosk.
In July, Kodak and CVS/pharmacy completed a trial of the PYNK smart print system at more than 30 CVS/pharmacy stores in Westchester County, N.Y.
"CVS/pharmacy has always been a bold first mover in photo center innovation, with a keen eye on products that really capture consumers’ attention," stated Nicoletta Zongrone, GM retail systems solutions and VP Eastman Kodak Co. "It was the world’s first national retailer to offer both Kodak picturovie DVDs and photo books, and we are proud to partner with them once again to introduce our newest innovation."
How it works: CVS/pharmacy customers select a PYNK smart print system-ready product, enter the six-digit PYNK product ID number at a PYNK-ready Kodak picture kiosk and watch as the Kodak PYNK smart print is printed to fit the product. Selected photos automatically are cropped, sized, arranged and printed on one sheet to fit the frame or mat.
Consumers can choose from a variety of collage frames and mats that can be used in many existing frames. PYNK smart print-ready frames come with a unique product ID card so consumers simply can bring the ID card back to the store and enter the product ID number into the PYNK-ready Kodak picture kiosk. The kiosk will know what frame or mat the consumer has at home and will layout and print the pictures to match.
Kodak PYNK smart print-ready products at CVS/pharmacy retail for $3.99 to $14.99, and will have both on-shelf and on-package indicators, including the Kodak PYNK smart print-ready logo, to signal their compatibility with the Kodak PYNK smart print system.
Despite Q2 losses, Rite Aid’s on the right track
CAMP HILL, Pa. Rite Aid on Thursday reported revenues of $6.2 billion, down 2.5%, reflecting a net loss of $197 million (minus 23 cents per diluted share) and adjusted EBITDA of $181.2 million (2.9% of revenues) for its fiscal second quarter ended Aug. 28.
“Despite lower sales and the sluggish economy, we started to see some positive trends in our business during the second quarter,” stated John Standley, Rite Aid president and CEO. “Sales in our core drug store categories have started to strengthen, and our gross margin trends are showing improvement,” he said. “[And] while reimbursement pressures are still challenging, our pharmacy margin rates have begun to stabilize.”
Aportion of the net loss can be traced to the investments Rite Aid has committed against initiatives designed to expand the business long term, including the Wellness+ customer loyalty program and the expansion of the chain’s immunization capabilities. “While the start-up costs of those investments have had a negative impact on our results this quarter, we’re excited about the impact we’re seeing so far,” Standley said. “More than 22 million customers and patients have enrolled in Wellness+ only five months after the nationwide launch. Our pharmacists have administered more flu shots this year than they did at the same time a year ago. [And] we remain focused on reducing costs and operating more efficiently. Our continued strong liquidity and recent refinancing give us even more runway to deliver on our initiatives.”
Same-store sales for the quarter decreased 1.5% over the prior-year 13-week period, consisting of a 0.9% decrease in the front-end and a 1.8% decrease in pharmacy. Pharmacy sales included an approximate 195 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores decreased 2.1% over the prior-year period. Prescription sales accounted for 68.1% of total drug store sales, and third-party prescription revenue represented 96.1% of pharmacy sales.
In the second quarter, the company opened no new stores, relocated five stores, remodeled one store and closed 20 stores. Stores in operation at the end of the second quarter totaled 4,747.
As previously announced, Rite Aid continued to reduce debt in the second quarter with the repurchase of $93.8 million of its 8.5% convertible notes due 2015. In addition, the company completed refinancing transactions that extended debt maturities and lowered interest expense. Those transactions included a new $1.2 billion revolving credit facility due 2015 that replaced its $1.2 billion revolving credit facility due 2012, and the issuance of $650 million of 8% senior secured notes due 2020 used to repay and retire the company’s $648 million Tranche 4 Term Loan due 2015 under its senior secured credit facility.
Based on current trends, Rite Aid revised its fiscal 2011 outlook for sales, adjusted EBITDA and net loss. Sales now are expected to be between $25 billion and $25.4 billion, with same-store sales expected to range from a decrease of 1.5% to flat. Adjusted EBITDA is expected to be between $875 million and $950 million.
As a result of narrowing adjusted EBITDA guidance, a $44 million debt modification charge for the company’s recent refinancing and lower interest expense related to the company’s refinancing and debt repurchase activities, net loss is now expected to be between $400 million and $590 million, or a loss per diluted share of 46 cents to 67 cents. The company confirmed previous guidance for capital expenditures at approximately $250 million.