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Walmart reportedly mulling same-day delivery in NYC

BY Deena M. Amato-McCoy

Walmart could be making another bold move in the online delivery game.

Speaking at an advertising industry event in New York City on Wednesday, Marc Lore, president and CEO of Walmart eCommerce U.S., said that he expects the chain to offer free, same-day delivery in New York City “very soon,” Bloomberg reported.

While the same-day deliveries are contained within New York City, the move sends a message to online rival Amazon, which offers same-day deliveries to Prime Now members who pay a subscription fee. Walmart and Jet already offer free two-day shipping for orders of $35 or more. This service also rivals Amazon Prime’s day delivery service, which also requires a membership fee.

Other companies are getting in on the same-day delivery game, including Target, which recently launched a pilot called Target Restock. Shoppers in the Minneapolis-St. Paul region can order from more than 10,000 products, ranging from laundry detergent and paper towels to granola bars and coffee, and receive merchandise the same day. The service, available only to Target REDcard holders, comes with a flat fee of $4.99 per box.

Other retailers trying their hand at same-day delivery in limited markets include Office Depot, Best Buy, Macy’s and Schnucks.

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Rite Aid to focus on 6 key areas, CEO says

BY Michael Johnsen

CAMP HILL, Pa. — Rite Aid's CEO John Standley on Thursday morning outlined the six important areas on which Rite Aid will focus to rebuild its momentum and grow its business.

"These six areas represent important opportunities for our business. Now that the amended agreement has received regulatory clearance, we can move forward with a clear sense of purpose," Standley said. "This is an especially important time for Rite Aid as we move forward as a stand-alone company. … [But] it's important to note that our team has done a tremendous job in continuing to provide great service. In fact, our internal metrics for overall satisfaction are higher year-over-year in both the front-end and the pharmacy."

1. Build a management team for the future.
Rite Aid picked up a seasoned pharmacy veteran in Kermit Crawford, well known across the industry as a sharp operator and progressive pharmacy mind, to serve as president and COO. "He [has] very deep pharmacy experience, not just pharmacy operations," Standley said. "He played a key role in the pharmacy benefit management business for a number of years, during a period of time they grew very rapidly, so he understands the third-party side of [pharmacy]. He was responsible for Walgreens' third-party contracting for many years, so he has deep experience there. He was also an innovator at Walgreens … they were the leader in flu shots, and Kermit has a key role in bringing the whole flu shot concept to market. And he drove a lot of their healthcare innovation."

Crawford joins Standley in leading a seasoned operations team with Bryan Everett in charge of the front-end as COO of Rite Aid Stores and Jocelyn Konrad, EVP pharmacy, Rite Aid.

2. Redefine and enhance the customer and patient experience.
Rite Aid hopes to build upon its strong health-and-wellness platform, which already includes the company's Wellness store format, to redefine and enhance the customer experience. Following the divestiture of stores to Walgreens Boots Alliance, more than 70% of Rite Aid's legacy store base will feature the Wellness format, Standley said. "Our highly-popular Wellness+ customer loyalty program continues to be key differentiator for Rite Aid. We've proven to be an innovator in the customer loyalty space and we will continue to build upon our successful loyalty program by adding new features and benefits in the months to come."

In addition, Rite Aid is planning to leverage its capabilities through subsidiaries Health Dialog and RediClinic.

3. Engage with payer partners in creating a sustainable business model.
"There's no doubt that reimbursement pressure has created challenges for our business," Standley said. Standley noted that with the Walgreens Boots Alliance deal behind them, they're in a better position to negotiate better reimbursement terms.

4. Evaluate pharmacy purchasing options to ensure a competitive drug cost.
The amended agreement with Walgreens Boots Alliance gives Rite Aid the option to source generic medicines through Walgreens Boots Alliance Development for a period of 10 years.

"This aspect of the agreement gives us an attractive option to consider as we explore our other strategic alternatives for the future," Standley said. Dates to keep in mind – Rite Aid has until May 2019 to execute its access to WBAD and its sourcing contract with McKesson expires in March 2019.

5. Streamline operations.
"Another important aspect of our plan is continuing our efforts to aggressively control costs," Standley said. Rite Aid is currently looking to generate an additional $50 million in savings for fiscal 2019.

6. Grow Rite Aid's pharmacy benefit manager EnvisionRx.
"Now that we're beyond the regulatory review process [regarding Walgreens], there is a significant opportunity to refocus and invest in the growth potential of this important business," Standley said.

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Former Walgreens EVP named Rite Aid president, COO

BY Michael Johnsen

CAMP HILL, Pa. — Rite Aid on Thursday named Kermit Crawford president and COO. Crawford, prior to serving as a retail and healthcare adviser and consultant for New York City-based Sycamore Partners, enjoyed a long career with Walgreens, most recently as EVP and president of pharmacy health and wellness.

"Kermit is a highly experienced retail pharmacy industry executive with exceptional leadership capabilities," stated John Standley, chairman and CEO Rite Aid. "This is an especially important time for Rite Aid as we move forward as a stand-alone company within the retail chain drug and healthcare industries and I am extremely pleased to have such an innovative and well-respected senior executive joining our Rite Aid leadership team as we move forward to successfully drive our business."

During his more than 30 years with Walgreens, Crawford held a wide range of store operations and senior management positions, including responsibility for the company's pharmacy services, which included its pharmacy benefit management services. When he retired from Walgreens in 2014, Crawford was executive vice president and president of Walgreen's pharmacy, health and wellness division, where he was responsible for all aspects of strategic, operational and financial management for the division.

Crawford also serves on the board of directors for Allstate and LifePoint Health. And he is on the Board of Councilors of the University of Southern California School of Pharmacy.

Also Thursday morning, Rite Aid posted $7.7 billion in revenues for the second fiscal quarter ended Sept. 2, representing an adjusted net loss of $15.6 million, or $0.01 per diluted share and adjusted EBITDA of $213.3 million, or 2.8% of revenues.

"While our performance for the quarter reflects a challenging reimbursement rate environment and the effects of an extended merger and asset sale process, securing regulatory clearance for the amended asset sale agreement with Walgreens Boots Alliance gives us a clear path forward to realize the benefits of the transaction and implement our plans to deliver improved results," Standley said. "As we work to complete the asset sale, which will reduce our leverage and provide greater financial flexibility to invest in our business, we'll also focus on generating momentum for our business by meeting the health and wellness needs of our customers and patients while delivering an outstanding experience in our stores."

Revenues for the quarter were $7.7 billion compared to revenues of $8 billion in the prior year's second quarter, a decrease of $350.9 million or 4.4%. Retail Pharmacy Segment revenues were $6.3 billion and decreased 3.4% compared to the prior year period primarily as a result of a decrease in same store sales and reimbursement rates. Revenues in the company's Pharmacy Services Segment were $1.5 billion and decreased 8.7% compared to the prior year period, due to an election to participate in fewer Medicare Part D regions.

Same-store sales for the quarter decreased 3.4% over the prior year, consisting of a 4.6% decrease in pharmacy sales and a 0.9% decrease in front-end sales. Pharmacy sales included an approximate 189 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, decreased 1.8% over the prior year period due in part, to exclusion from certain pharmacy networks that Rite Aid participated in the prior year. Prescription sales accounted for 67.8% of total drug store sales, and third party prescription revenue was 98.3% of pharmacy sales.

In the second quarter, the company opened 1 store, relocated 1 store, remodeled 54 stores and expanded 1 store, bringing the total number of wellness stores chainwide to 2,532. The company closed 17 stores, resulting in a total store count of 4,507 at the end of the second quarter.
 

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