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Rite Aid fills No. 2 position

BY Michael Johnsen

CAMP HILL, Pa. Rite Aid Corp. Wednesday morning stated that Robert Easley, 48, a 16-year veteran of the H.E. Butt Grocery Co. with extensive experience in store operations, pharmacy, marketing and management, will join Rite Aid as chief operating officer.

Easley most recently served as senior vice president, chief marketing officer and head of pharmacy for the $11.5 billion H-E-B chain.

Jim Mastrian, currently Rite Aid chief operating officer, will become special adviser on corporate strategy, reporting directly to Rite Aid chairman, president and chief executive officer Mary Sammons. Mastrian will focus on Rite Aid’s strategic direction and initiatives, with particular emphasis on the integration of the Brooks Eckerd drugstore chain.

“It’s important we continue to build a strong executive team and evolve our long-term strategy to take the company to the next level,” Sammons stated. “Jim and I have been working together for some time to build the succession plan for Rite Aid, searching for talented and experienced leaders who can build on the significant changes Jim has made to improve our operations and strengthen our company. … We both look forward to working with Rob who has excelled in so many areas in retail, from store operations and pharmacy to marketing and store development. His involvement in all areas of the business at H-E-B, which is known as one of the most innovative and successful retailers in the country, will be a great asset to Rite Aid now and in the future.”

“Rob comes to Rite Aid with a very successful track record at H-E-B, including improving store execution, strengthening pharmacy and helping create a customer-driven culture,” Mastrian said. “His experience will help us continue to build on the substantial improvement we’ve made to our business and position us well for the future.”

In his new position, Easley will have overall responsibility for all store operations, category management, marketing, merchandising, supply chain and pharmacy services and operations, reporting directly to Sammons. He joins Rite Aid Aug. 20.

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Fred’s Inc. reports 4 percent increase for 2Q

BY Michael Johnsen

MEMPHIS, Tenn. Fred’s Inc. last week reported second-quarter sales of $424.6 million for the period ending Aug. 3, representing an increase of 4 percent. Comparable store sales for the quarter increased 0.8 percent versus the same period last year.

“Sales in July were below our expectations. Softlines, pharmacy and stationery were not as strong as we had planned, while pets and domestics were ahead of plan for the month,” commented Fred’s chief executive officer Michael Hayes on the results.

“Helping to offset slower sales, we had lower-than-planned markdowns on back-to-school supplies,” Hayes added, “and the shift to generic drugs, as we have said before, should have a largely neutral-to-positive effect on our bottom line because of the increased margin on generics.”

In July, Fred’s opened three new stores and one pharmacy. Through the first half of fiscal 2007, Fred’s has opened 16 new stores and nine pharmacies and has closed 16 stores and four pharmacies. For the full fiscal year 2007, the Company plans to open a total of 30 to 35 new stores, 15 to 25 new pharmacies, and expects to close 20 to 25 stores.

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Duane Reade announces strong second quarter

BY Antoinette Alexander

NEW YORK Duane Reade announced on Tuesday that during the second quarter it experienced record front-end same-store sales thanks to strong sales of convenience, health and wellness, and beauty products.

“This growth is especially gratifying as the increase follows record front-end comp-store growth of 7.3 percent for the comparable quarter a year-ago,” stated Rick Dreiling, chairman, president and chief executive officer of Duane Reade.

Front-end same-store sales rose 9.4 percent, while pharmacy same-store sales increased 6.1 percent. Total same-store sales increased 7.9 percent. Total net sales rose 8.3 percent to $431.9 million from $398.8 million in the year-ago period.

Net loss for the quarter narrowed to $20.1 million compared with a loss in the year-ago period of $21.1 million. The current year’s second quarter results included $4.2 million of other expenses, including $1.8 million in costs related to the previously disclosed and completed accounting investigation, $1.4 million in connection with the company’s former chief executive officer, and $0.7 million of closed store costs.

Gross margin for the quarter rose to 21.1 percent from 20.3 percent last year and reflected a continuation of the improved trend of front-end margins partially offset by reduced pharmacy margins resulting from increased penetration of lower Medicare Part D sales combined with reductions in Medicaid reimbursement rates that went into effect in July 2006.

Total debt at quarter end was $560.6 million, reflecting a decrease of $11.8 million from the balance at the end of fiscal 2006.

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