Kinney merchandising department gets makeover
GOUVERNEUR, N.Y. — Regional chain Kinney Drugs has promoted several executives in an effort to realign its merchandising department, the company said Wednesday.
Kinney, which operates stores in northern New York and Vermont, said the promotions would allow it to enhance relations with vendors and product planning and deliver improved product assortments.
"These changes are part of a long-term plan," VP retail merchandising Rick Cognetti said. "We want to ensure that the necessary merchandising structure is in place to support consumer demands and Kinney Drugs’ continued success."
Category division manager Cheri Taylor has been promoted to the new position of director of retail merchandising, in which she’ll be responsible for developing and implementing sales and promotional strategies, ensuring that sales and gross margin goals are met and the development of effective category management practices.
Merchandising presentation supervisor Marc Baum has been promoted to category manager in general merchandise, replacing the recently retired Sue Easton.
Steve Harris, who recently began working for the company as inventory and replenishment manager, will continue to take an active role in the implementation of supply chain software and will be a key player in developing an "advanced replenishment and inventory-control structure."
Taylor and Harris will report to Cognetti, while category managers will report to Taylor.
"This realignment positions us well for the future and will enable us to better deliver on our strategy of value, convenience and exceptional customer service while meeting the evolving needs of customers," Cognetti said.
Zak Designs rolls out Back to College line
SPOKANE, Wash. — Zak Designs has introduced new mealtime products ideal for college students.
The new Back to College line, includes durable dinner plate, individual bowl and 24-oz. tumbler, along with a 14-oz. double-wall travel tumbler and 25-oz. Tritan water bottle.
Each of the items are available in Muppets characters or Hello Kitty, Zek Designs said.
CVS reports gains from ESI-Walgreens feud
WOONSOCKET, R.I. — CVS Caremark recorded strong financial results for the fourth quarter and full year, and made solid progress across the enterprise during 2011, which set the stage for future growth. However, it was the potential benefit that CVS Caremark is seeing from Walgreens’ battle with Express Scripts that was top of mind for many and was a key question that president and CEO Larry Merlo hit head on at the top of Wednesday morning’s conference call.
“The benefit was not material to our results in the fourth quarter, although it did start to ramp up late in the year. Now since the start of this year, we are seeing a significant number of transfers from Walgreens into CVS. In fact, the amount is a bit more than we anticipated,” Merlo told analysts, referring to Walgreens’ withdrawal from the Express Scripts network. “We have spent the last several weeks focused on ensuring that Express Scripts members have uninterrupted, convenient access to pharmacy care and excellent service. The feedback, to date, from our new customers has been excellent.”
Merlo noted that CVS Caremark has made investments in store labor and marketing to enhance it success in capitalizing on the opportunities from the impasse between Walgreens and Express Scripts. Based on the early results, CVS Caremark is now projecting that earnings per share will benefit by about 3 cents per share in the first quarter of 2012, should the situation remain unresolved for the duration of the quarter. This guidance is 1 cent higher than that provided during the company’s recent Analyst Day.
Should the impasse remain unresolved, CVS Caremark will report the estimated impact on a quarter-by-quarter basis throughout the year, Merlo told analysts.
Meanwhile, the 2012 selling season in the PBM segment continues to be on the upswing with a 98% retention rate. Net new business wins now total $7.2 billion, up from the $6.8 billion provided on Analyst Day. The estimate for the number of new Medicare Part D lives for 2012 has increased to 200,000.
In addition to net new business wins, the company expects an additional $5.5 billion in incremental revenue in 2012 associated with the acquisition of the Universal American Medicare Part D business in 2011.
In light of this, the total 2012 impact revenues currently stand at $12.7 billion, which is up from the $12.3 billion projected on Analyst Day.
During the fourth quarter ended Dec. 31, revenues in the pharmacy services segment increased 32.4% to $15.9 billion.
“Obviously there’s a lot to be pleased about with these results of our 2012 selling season and, again, we believe that driving top-line growth will be an important component of successfully growing our operating profit over time,” Merlo told analysts. Merlo also noted that the company’s flagship programs — Maintenance Choice and Pharmacy Advisor — are resonating in the marketplace.
As previously reported by Drug Store News, CVS Caremark has unveiled the next generation of its Maintenance Choice program. Through version 2.0, there are no design plan changes required to gain 90-day economics for patients and payers, and there’s complete flexibility for consumers to alternate between mail and CVS/pharmacy.
There are currently roughly 10.2 million lives covered under 835 plans that have implemented, or committed to implement, Maintenance Choice through March 2012. Under Maintenance Choice 2.0, which will be broadly available in January 2013, CVS Caremark expects to see the number of clients to increase dramatically in the coming years.
CVS Caremark also is advancing its Pharmacy Advisor program, which currently is focused on diabetes. The company previously announced its plan to roll out Pharmacy Advisor to several cardio vascular conditions in 2012, and with Pharmacy Advisor 3.0, the company is building a comprehensive clinical program for multiple chronic conditions.
There currently are 15.9 million lives covered by nearly 900 clients who are committed to implement Pharmacy Advisor for diabetes, up from 12 million lives at year end. For Pharmacy Advisor 3.0, the company has already signed up 344 clients covering 8.8 million lives for cardiovascular disease, which will be available come spring.
“I think it is pretty clear that our PBM is performing well, making continued great progress and is fully expected to return to healthy operating profit growth this year,” Merlo said. Turning to the retail segment, revenues rose 4% to $15.5 billion during the fourth quarter. Same-store sales increased 2.5%, as front-end same-store sales increased 0.1%. Pharmacy same-store sales rose 3.6%.
Merlo noted that the company continues to make progress on its clustering initiatives, with 420 Urban Cluster stores completed by year-end 2011, and it expects to add roughly 50 more locations in 2012. As previously reported by Drug Store News, the company will continue to drive sales through segmentation and store clustering initiatives and, in 2012, will test several demographic-based segmentation approaches.
“We believe these efforts around localization are a key component to optimizing a return on capital of our remodel program,” Merlo said.
Another important business segment is MinuteClinic, which continues to grow and achieve its targets. Despite a weak flu season, MinuteClinic revenues increased nearly 40% in the fourth quarter compared with last year.
To further grow, MinuteClinic continues to add additional services and raise awareness. For example, Merlo noted, the clinic operator launched a marketing campaign in its Texas markets to inform patients of the new Texas law that requires college students to be vaccinated for against meningitis prior to the January school start. The result: A 50% increase in vaccinations.
“We closed out 2011 with a very good quarter, earnings solidly in line and free cash flow well ahead of target. Once again, we delivered on our promises,” Merlo told analysts. “As you heard, 2012 is off to a great start and today we increased our earnings and cash flow guidance to reflect the industry opportunity we are capitalizing on, as well as greater confidence around our working capital management.”
Net revenues for the fourth quarter rose 15.2% to $28.3 billion.
Fourth-quarter net income attributable to the company rose to $1.06 billion, or 81 cents per share, from $1.02 billion, or 75 cents per share, a year earlier.
In the first quarter 2012, adjusted EPS from continuing operations is expected to be between 61 cents and 63 cents. GAAP diluted EPS from continuing operations are expected to be between 55 cents and 57 cents.
CVS Caremark expects to deliver adjusted EPS of $3.18 to $3.28 and GAAP diluted earnings per share from continuing operations of $2.96 to $3.06 per share in 2012.
It also raised its 2012 free cash flow guidance by $300 million to a range of $4.6 billion to $4.9 billion. Cash flow from operations in 2012 is expected to be between $6.2 billion and $6.4 billion.