Rite Aid boosts sales with Brooks/Eckerd
CAMP HILL, Pa. —A full four quarters of Brooks/Eckerd sales results helped boost Rite Aid revenues by 8.1% to $26.3 billion for its fiscal year 2009 ended Feb. 28, Rite Aid reported earlier this month.
“Despite continued weakness in the economy, we were able to improve our business significantly in the second half of the year as we completed the integration of Brooks/Eckerd, enhanced our management team and focused on strengthening our financial position,” stated Mary Sammons, Rite Aid chairman and CEO.”
Rite Aid currently is in the process of identifying two classes of stores within its overall base—low-volume stores and metropolitan markets—and implementing initiatives specific to those classes in an effort to improve efficiencies. “Rite Aid has already taken steps with 440…low-volume stores to make fewer deliveries each week, shrink the weekly circular and the amount of promotional inventory sent to the stores, and fine-tune store labor and field supervision,” noted Meredith Adler, Barclays Capital analyst. “We really saw the sales in those stores actually perform as well as the overall chain,” John Standley, Rite Aid president and COO, noted.
Rite Aid took a similar approach to its Philadelphia stores, which generally have higher sales of fast-turning consumables and lower sales of discretionary seasonal goods. Rite Aid plans to expand its learnings from Philadelphia to other markets this year. The company also mentioned launching a new prescription loyalty program in the second half of 2010, though declined to provide greater detail.
Beyond the “Philadelphia Experiment,” the company continues to explore opportunities to trim fat. Last year, Rite Aid shut 200 underperforming stores, and it expects to shut 117 more this year.
“[Rite Aid] is aggressively cutting field and store-level labor, advertising expenses, inventory and capital expenditures,” noted Credit Suisse research analyst Edward Kelly. “While the company’s plan of action makes sense, the impact on sales may be larger than the company expects, and we believe it will ultimately look to sell assets [such as its West Coast or Southeast stores] to negotiate its September 2010 revolver maturity.”
Kroger to serve as exclusive supermarket sponsor of Fiesta Atlanta ’09
ATLANTA Kroger will serve as the exclusive supermarket sponsor of Fiesta Atlanta ’09, an outdoor Cinco de Mayo festival celebrating Latino culture, music and food.
Fiesta Atlanta ’09 takes place on Sunday, May 3 at Centennial Olympic Park in downtown Atlanta. For Kroger, the partnership represents the company’s commitment to the Hispanic community.
“We are very excited and looking forward to Fiesta Atlanta,” said Glynn Jenkins, director of communications and public relations for Kroger’s Atlanta Division. “Kroger has always made exceptional efforts to serve the Hispanic community and joining this celebration is another commitment to our Hispanic customers.”
Atlanta’s largest Hispanic outdoor family festival, Fiesta Atlanta attracted over 40,000 attendees last year. This year’s event will once again feature authentic food from many Latin-American countries, arts and crafts, sponsor displays with many free product samples and continuous live musical performances by national and local recording artists.
AARP cites big jump in Rx prices
NEW YORK A report by AARP indicated that prices for branded drugs have increased at a rate outpacing the rate of inflation by more than six percentage points.
The report found that manufacturers’ prices for branded drugs increased by 9% last year, compared with the general inflation rate of 3.8%. Meanwhile, prices of generic drugs decreased, on average, by 10.6%.
Generic drugs have already grown significantly over the years, accounting for 69% of all prescriptions dispensed in the United States, but 16% of money spent on prescriptions, according to IMS Health. In 2007, according to the National Association of Chain Drug Stores, the average price of a generic prescription drug was $34.34, compared to $119.51 for a branded drug.
Price increases for branded drugs significantly higher than the overall rate of inflation, mixed with the recession, are likely to drive more consumers to generics. According to AARP, nearly a quarter of all older Americans skip medication doses because of the cost, while other studies have shown that many Americans facing economic hardship don’t have prescriptions filled at all.
At the same time, many branded pharmaceutical drugs – not to mention biologics – don’t yet have a generic version. This could create difficulties for elderly and other patients who may be able switch to medications that are cheaper, but different from what they take, or who take biologic drugs or newer drugs that have no equivalent on the market.
The Generic Pharmaceutical Association said the report indicated that generic medicines are “the right choice for better health.”
“During these difficult economic times, it is truly disturbing to hear reports that our nation’s seniors cannot afford their prescription drug costs,” GPhA president and CEO Kathleen Jaeger said in a statement responding to the report. “No one should be forced to choose between putting food on their table and paying for needed medicines.”
Jaeger also said the report illustrated the need for a regulatory pathway for biosimilars.
“It’s time to do right by our seniors and all Americans struggling with healthcare costs by approving legislation that brings safe, effective and affordable biogeneric medicines to patients sooner rather than later,” Jaeger said. “GPhA also strongly believes that increasing funding for FDA would ensure the more timely approval of generic medicines, increasing the opportunity for consumers to save immediately.”