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Drug stores expected to close out 2010 on strong note

BY Michael Johnsen

NEW YORK — Credit Suisse analysts on Monday projected strong front-end sales and improved pharmacy comparisons for December.

“Industry front-end sales growth will accelerate in December on easier comparisons and increased promotional activity,” Credit Suisse research analyst Edward Kelly noted. “Sales last year were negatively impacted by low levels of seasonal inventory (especially at Walgreens) and unusually soft flu activity after an early start to the season,” he added.

Conversely, many retailers have been reversing their SKU rationalization initiatives and early indicators suggest flu activity is on the rise. “The rollout of new promotional programs, like Walgreen’s Jingle Cash initiative, should also drive incremental front-end traffic,” Kelly wrote.

Comparisons in the pharmacy also will ease in December, Kelly suggested. Flu activity currently appears to be tracking in line to above last year based on data from the Centers for Disease Control and Prevention and Google Flu Trends. “We noted that comparisons in the pharmacy become significantly easier in the first half of 2011, and even a mild flu season in upcoming months should provide a tailwind to pharmacy comps,” Kelly surmised.

Kelly estimated that Rite Aid December comps will slip 0.3%, versus an average of -1.3% for the previous three months and consensus of -1%. Pharmacy comps should fall by only 1%, reflecting easier flu comparisons, while front-end same-store sales should increase by 1%. Rite Aid reports monthly sales on Jan. 4.

For Walgreens, which will post December sales on Jan. 5, Kelly projected a 3.5% comps increase, which falls in line with analysts’ consensus of 3.4%. “We project a 4.5% front-end comp, well above the 1.5% November gain and 3.1% decline last year,” Kelly wrote, noting that the company’s decision to pull back on holiday inventory penalized sales last year. Kelly expected a 3% gain in pharmacy, an estimate that includes a 1% combined benefit from increased flu activity and flu shots.

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Rite Aid resolves to grow loyalty card biz

BY Michael Johnsen

CAMP HILL, Pa. — Rite Aid last week sweetened the pot associated with its loyalty card.

Rite Aid customers who use their Wellness+ card between Dec. 28, 2010, and Jan. 22 will be entered into a sweepstakes for a chance to win a dream vacation, fitness equipment, personal electronics and more as part of a new reward program created by Rite Aid called Resolution Rewards.

“With our Resolution and Winter Rewards program, we’re able to deliver even more value to our 29 million Wellness+ members, while giving away some great prizes along the way,” stated John Learish, Rite Aid SVP marketing. “The more often Wellness+ members shop and use their Wellness+ card, the greater their chance to win a prize that will help them enjoy winter a little more.”

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Dixieland — there’s an app for that

BY Michael Johnsen

JACKSONVILLE, Fla. — Winn-Dixie Stores on Monday introduced a smart phone application for its customers that will help them locate the closest Winn-Dixie, allow them to view the weekly circular and sales for that specific store, and create and manage shopping lists that both sync with computers and can be shared with other users.

“Our customers are on the go more than ever and this new app will make their busy lives easier,” stated Mary Kellmanson, Winn-Dixie group VP marketing. “Using the new app in the store, you can check off items as you place them in your cart so you’ll never miss an item on your list. And you’ll always be organized — no more paper lists stuffed in pockets or purses, or left at home or in the car.”

The app is available for Droid and Apple’s iPhone smart phones as a free download through Apple iTunes, the Android Market or through links on Winn-Dixie’s website at WinnDixie.com/mobile/apps.

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