News

Rite Aid reports 2.7% lift in Q1 sales; Wellness Stores now make up 29% of chain

BY Michael Johnsen

CAMP HILL, Pa. — More than 1-in-4 Rite Aid locations now reflect the latest in healthcare retailing — the company’s Wellness store format, the concept that serves as a cornerstone to Rite Aid’s overall health-and-wellness solution, John Standley, Rite Aid chairman and CEO, told analysts Thursday morning. "From a strategic standpoint, it’s important to note that our Wellness stores will serve as a primary vehicle for launching innovative merchandising solutions, expanded healthcare offerings and, over the next few years, our relocation and new store program," he said. 

Later Thursday morning, during the chain’s annual shareholder meeting, shareholders elected eight directors to hold office until the 2015 Annual Meeting of Stockholders, including John Standley, Rite Aid chairman and CEO, and directors Joseph Anderson, Jr., Bruce Bodaken, David Jessick, Kevin Lofton, Myrtle Potter, Michael Regan and Marcy Syms. Rite Aid shareholders also ratified the appointment of Deloitte & Touche as the company’s independent registered public accounting firm, approved the compensation packages of Rite Aid’s executive officers and approved the adoption of the Rite Aid Corporation 2014 Omnibus Equity Incentive Plan. 

Rite Aid stock holders overwhelmingly voted down a shareholder proposal to split the chairman and CEO positions at Rite Aid.

As will be heralded next week with the unveiling of Rite Aid’s Beverly Hills Wellness Store, the evolving healthcare solution concept store features an augmented over-the-counter offering, coupled with a stylish beauty offering. "[This store] illustrates how we’re aggressively evolving the format to identify additional features that can be broadly applied to future remodels and other features that can be implemented in select stores with specific growth opportunities," Standley said. "Wellness Stores will also serve as the foundation for expanding our healthcare offering, including our Rite Aid Health Alliance program for patients with chronic and poly-chronic conditions, as well as adding RediClinics to Rite Aid stores." 

Rite Aid is targeting 70 RediClinic openings over the ensuing 18 months, and Rite Aid most recently partnered with Penn State Hershey Health System through its Health Alliance initiative, which is now active in four markets."We [will] continue to focus on forming partnerships with additional medical practices as we look to provide a higher level of care," Standley said. 

"[Rite Aid Wellness Stores] continue to outperform the rest of the chain in terms of same-store front-end sales and script count," said Ken Martindale, Rite Aid president and COO. "[The Beverly Hills location] includes concepts that have done well in pilot and will be broadly applied to future Wellness Stores, like our enhanced OTC presentation that features educational materials, interactive product displays and creative fixturing," he said. "The store also features concepts that we’re just beginning to test, such as our Fresh Day Cafe that serves coffee, pastries, breakfast sandwiches and Rite Aid’s very own Thrifty ice cream," Martindale said. "Finally, this store includes an expanded and enhanced beauty department staffed by a terrific beauty advisor."

While most of Rite Aid’s new merchandising concepts will be incorporated into future Wellness store remodels, such particularly compelling features as Rite Aid’s nail bar concept will be folded into existing Wellness stores as well, Martindale said. 

Overall, Rite Aid is looking to align its front-end with its healthcare solutions portfolio. "We are currently working to further strengthen our smoking cessation program by developing a best-in-class consumer solution," Martindale said."We have also launched a nutritional labeling system to help shoppers easily find food items that are a better fit for their wellness needs."

Rite Aid also is benefitting from the momentum of its loyalty card program — Rite Aid’s Wellness65+ membership roll now is approaching 2 million, Martindale said. The broader Wellness+ loyalty program continues to perform as well, as customers respond positively to "the program’s unique combination of exclusived savings and wellness benefits."

Rite Aid on Thursday reported a 2.7% lift in revenues to $6.5 billion for its fiscal first quarter ended May 31. Net income totaled $41.4 million or $0.04 per diluted share, and adjusted EBITDA reached $282.6 million, or 4.4% of revenues. 

Same-store sales for the quarter increased 3.1% over the prior year. Front-end same-store sales were flat compared to the prior-year period while pharmacy same-store sales increased 4.6%. Pharmacy sales included an approximate 143 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores increased 2.3% over the prior year period. Prescription sales accounted for 68.4% of total drug store sales, and third party prescription revenue was 97.4% of pharmacy sales.  

In the first quarter, the company relocated three stores, remodeled 105 stores and expanded one store, bringing the total number of wellness stores chainwide to 1,325. The company also acquired one store and closed seven stores, resulting in a total store count of 4,581 at the end of the first quarter. 

Rite Aid also confirmed its fiscal 2015 guidance, which was updated on June 5, 2014. Sales are expected to be between $26 billion and $26.5 billion and same-store sales to range from an increase of 2.5% to an increase of 4.5% over fiscal 2014. 

Capital expenditures are expected to be approximately $525 million, which will fund one new store, 19 store relocations and 450 Wellness Store remodels. 

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Which area of the industry do you think Amazon's entry would shake up the most?
News

Update: Kroger sees ‘strong’ Q1, raises fiscal 2014 guidance

BY Antoinette Alexander

CINCINNATI — Starting off the year with a strong momentum, Kroger posted a 9% increase in first quarter sales, which marked the first period that includes Harris Teeter in the statement of operations. Based on its strong quarter, the company has raised its fiscal 2014 guidance.

Total sales increased 9.9% to $32.96 billion in the first quarter compared with $30 billion for the same period last year. Total sales, excluding fuel, increased 11.4% in the first quarter over the same period last year. 

Net earnings, including charges related to pension obligations, totaled $501 million, or 98 cents per diluted share, and identical supermarket sales growth, without fuel, of 4.6% in the first quarter of fiscal year 2014. 

When discussing identical sales for the quarter, the company noted that in pharmacy they continued to see “strong performance both from a script count and a sales basis.” Specific details were not disclosed.

Excluding charges, Kroger’s adjusted net earnings were $557 million, or $1.09 per diluted share, for the first quarter.  Net earnings in the same period last year were $481 million, or $0.92 per diluted share.

"Kroger associates continue to enhance our connection with all customers and achieve our key performance measures, which are allowing us to achieve our growth strategy and create shareholder value," stated Rodney McMullen, Kroger’s CEO. "Our strong first quarter results set us up to deliver a 12% to 15% net earnings growth rate for the year, partly due to the benefit of Harris Teeter, compared to our long-term growth rate of 8% to 11% plus the growing dividend. We are pleased to start the year with growth momentum while also returning $1.1 billion in cash back to shareholders this quarter through our buyback program."

During a call with analysts Thursday morning to discuss results, McMullen said that the company is seeing a rebound in consumer confidence as the economy shows signs of improvement.

“We are seeing strong, positive indicators in shopping behavior. Our customers have exhibited less cautious spending behavior, for example. Consistent with rise in consumer confidence index in May, our own customer research tells us that more customers perceive the economy to be in recovery,” McMullen told analysts. “While it is obviously welcomed news, the recovery remains fragile, especially for customers on a budget.”

The company stated that its strong financial position allowed it to return more than $1.9 billion to shareholders through share buybacks and dividends over the last four quarters. During the first quarter, Kroger repurchased 25.7 million common shares for a total investment of $1.1 billion. This was contemplated in the company’s original guidance.

Based on the first quarter results, the company raised and narrowed its adjusted net earnings guidance to a range of $3.19 to $3.27 per diluted share for fiscal 2014. The original guidance was $3.14 to $3.25 per diluted share. The company’s long-term net earnings per diluted share growth rate guidance is 8% to 11%, plus a growing dividend.  Kroger raised its identical supermarket sales growth guidance, excluding fuel, to 3.0% to 4.0% for fiscal 2014.  The original guidance was 2.5% to 3.5%.

In January, Kroger completed its merger with Harris Teeter. The transaction enabled Kroger to expand with the Harris Teeter brand and a base of 227 stores in the Southeastern and mid-Atlantic markets and in Washington, D.C. Harris Teeter continues to operate its stores under the Harris Teeter brand name as a subsidiary of Kroger. Harris Teeter had revenues of $4.7 billion for fiscal year 2013. According to Kroger, the company operates retail pharmacies in 1,947 of its food stores. The merger with Harris Teeter brought an additional 159 pharmacies to the Kroger portfolio.

During Thursday’s conference call, Michael Ellis, president and COO, said that the company’s merger with Harris Teeter is “going extremely well.”

“We are spending a lot of time with Harris Teeter and learning about how they connect with customers. Their store standards in fresh foods are world-class and our cultures are a great fit, which makes our integration rather easy. We are excited about what we are learning about Harris Teeter’s online ordering and store pick-up model; it is a program with a lot of promise,” Ellis said.
 

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Which area of the industry do you think Amazon's entry would shake up the most?
News

Travel immunizations now available at select Giant Food pharmacy locations

BY Antoinette Alexander

LANDOVER, Md. — Giant Food of Landover, Md., has announced that it is now offering pre-travel consultations and immunizations at select Giant Food stores. 
 


Giant Food Travel Health Clinics, staffed by specially trained pharmacists, provide convenient, comprehensive pre-travel consultations.  A pre-travel visit includes current and destination-specific recommendations for a $30 fee. Recommendations may include immunizations, prophylactic medications (such as anti-malaria drugs), and specific health advice to prevent and treat illness travelers may encounter. The clinics administer immunizations to help prevent hepatitis, yellow fever, measles, meningitis, polio, typhoid and other diseases.




“We pride ourselves in offering the highest quality service to support our pharmacy customers’ busy lives, and that includes travel abroad plans,” said Gayle Shields, director of pharmacy operations, Giant Food. “Whether it’s travel for business, service or study abroad, or leisure, our Travel Health Clinic pharmacists will work with each customer to provide specialized assistance and consultation customized to travel destinations.”  

The Centers for Disease Control and Prevention notes that some diseases that are not common in the United States still exist in other countries — and even in airplanes and airports during layover travel. International travel continues to grow substantially and many travelers are unaware of the risks they face or how to minimize them. 

Even if one’s family has all the recommended vaccines, “booster shots” are sometimes needed for vaccines that have become less effective over time. CDC recommends consulting with a travel medicine specialist, like those at Giant’s Travel Health Clinics, at least four to six weeks before departure.  

 

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

Polls

Which area of the industry do you think Amazon's entry would shake up the most?