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Drug chains end 2015 with modest sales gains

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NRF: Retailers able to achieve growth in difficult holiday season

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NEW YORK — Drug stores outpaced other mass retailers in December sales, even with modest increases in total and same-store sales for the month.

Total drug store sales in December were up 4% compared with the same month last year, according to research by Chain Drug Review publisher Racher Press. Same-store sales increased 1.7%.

And sales for the 28-day period between Thanksgiving and Christmas were up 4.1% versus the comparable 27-day holiday period in 2014. Same-store sales were up 1.8% for the holiday period.

Chain Drug Sales_2015 ScoreboardThat compares to discount stores, which posted a 3.3% sales gain and a 1.1% same-store sales gain for the holiday period. Supermarkets had a 2.7% overall increase and a 1.2% same-store sales gain.

For the 2015 calendar year, chain drug retail sales totaled $298.02 billion, up 4.9% from 2014, according to Racher Press research. Comparable-store sales gained 3.2% for the year.

Rite Aid Corp., one of the handful of retailers that reports monthly sales results, said its same-store sales for the four weeks ended December 26 decreased 0.1% compared with the prior-year period.

December front-end same-store sales increased 0.8%, while pharmacy same-store sales, which included a negative impact from new generic introductions of about 207 basis points, decreased 0.6%. Prescription count at comparable stores decreased 0.4% over the prior-year period.

Rite Aid’s total drug store sales for the four-week period were essentially flat at $2.21 billion. Prescription sales accounted for 64.6% of those sales, and third-party prescription sales represented 98% of pharmacy sales.

Small-box discounter Fred’s Inc., another pharmacy operator that reports monthly sales results, said that its total sales for December increased 10% to $231.9 million, and comparable-store sales increased 2.4%.

Comparable sales for the company’s retail pharmacy department, however, were negatively affected in December by a very low incidence of cold and flu activity, which reduced December’s overall comparable-store sales by about 125 basis points.

The National Retail Federation reported that overall 2015 holiday retail sales rose 3% to $626.1 billion. NRF said it projected total growth of 3.7%, including online sales. Nonstore holiday sales advanced 9% to $105 billion. December retail sales (excluding automobiles, gas stations and restaurants) dipped 0.2% on a seasonally adjusted basis from November but were up 3.1% unadjusted year over year.

“Make no mistake about it, this was a tough holiday season for the industry,” NRF president and chief executive officer Matthew Shay said in a statement. “Weather, inventory challenges, advances in consumer technology and the deep discounts that started earlier in the season and that have carried into January presented stiff headwinds as retailers competed with one another and their own bottom line. Despite these factors, the industry rallied, consumers responded and sales still grew at a healthy rate, which is a huge testament to the resilience, knowledge and expertise of our retail leadership.”

Jack Kleinhenz, NRF’s chief economist, noted that a “double whammy” of deflation and inclement weather in December hampered holiday sales growth and consumer spending,. “The results of December’s retail sales remind us just how significant of an impact unusual weather can have on retail and overall economic activity,” he stated.

“While the timing is uncertain, there are positive prospects for improvement, including recent job gains that will help lift income and earnings, and a healthy housing market that should provide some support for spending in various retail sectors,” Kleinhenz added.

According to the U.S. Commerce Department, December retail sales declined 0.2% seasonally adjusted month to month but grew 2.2% unadjusted year over year. For 2015, retail trade sales totaled nearly $4.7 trillion, up 1.4% from 2014.

Editor’s Note: Russell Redman contributed to this story.


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