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Rx boosts Rite Aid's same-store sales in February
March 8th, 2012
CAMP HILL, Pa. – Getting a lift from prescription business, Rite Aid Corp. saw same-store sales growth climb in February.
Rite Aid said Thursday that for the five weeks ended March 3, comparable-store sales rose 3.1% year over year. That topped the drug chain's 2.2% comp-store gain in January and approached the 3.6% same-store increase in December, the retailer's largest in 2011.
In February, same-store sales were up 1.9% in the front end, but comparable pharmacy sales growth was larger.
Pharmacy same-store sales advanced 3.7% in February, despite a negative impact of 242 basis points from generic drug introductions, according to Rite Aid. Prescription count at comparable stores gained 2.2% in the month. Growth in comparable pharmacy sales and prescriptions filled in February exceeded the gains Rite Aid recorded in January and December (excluding the New Year's calendar shift).
Total drug store sales for February climbed 2.3% to $2.55 billion, besting the 1.6% uptick in the previous month. Prescription sales accounted for 68.3% of February drug store sales, compared with 70% in January, which saw higher front-end same-store growth.
For the 14-week fiscal 2012 fourth quarter ended March 3, Rite Aid's same-store sales grew 3%, reflecting increases of 1.6% in the front end and 3.8% in the pharmacy. Prescriptions filled at comparable stores rose 2.4%. Overall drug store sales in the quarter were up 2.5% to $7.12 billion, with prescription sales accounting to 67.4% of that revenue.
The surge in prescription sales comes amid the contract stand-off between Walgreen Co. and pharmacy benefit manager Express Scripts Inc. As of Jan. 1, Walgreens has been out of the PBM's pharmacy network.
Rite Aid hasn't provided estimates of potential financial benefits from the Walgreens-Express Scripts dispute. But in a November research note, Credit Suisse analyst Ed Kelly estimated that market share gains arising from the situation could yield $381 million in sales for Rite Aid and lift its EBITDA by 6.2% and its gross profit by 1.3%.
Chain drug store rivals such as CVS/pharmacy and supermarket pharmacy operators like Supervalu Inc. have been marketing their pharmacy services to displaced Walgreens customers with materials "welcoming" Walgreens Rx patients to their stores.
Rite Aid, too, has been working to pick up that prescription business, president and chief executive officer John Standley said in a late January interview with Chain Drug Review.
Commenting on Rite Aid's improved financial performance, Standley said "it's hard not to be encouraged by the last four quarters of results." He cited the retailer's wellness+ customer loyalty program, with more than 47 million members, as a big catalyst.
"There’s a lot of opportunity for us to gain some market share with wellness+ and just continuing to improve the way we run our stores," Standley said.
Rite Aid closed out its 2012 fiscal year on an up note. Same store sales for the 53-week period ended March 3 increased 2%, including gains of 1.1% in the front end and 2.4% in the pharmacy. Prescriptions filled at comparable stores edged up 0.9%. Total drug store sales for the year came in at nearly $26.02 billion, up 1.5% from $25.63 billion a year earlier. Prescription sales represented 68.1% of drug store sales.
The year-end revenue total was in line with Rite Aid's guidance of $25.85 billion to $26 billion, although the same-store sales result came in slightly more than the high-end projection for growth of 1.75%. Rite Aid noted that its guidance assumed no gain from the Walgreens-Express Scripts impasse.
As of March 3, Rite Aid operated 4,667 drug stores, compared with 4,714 a year earlier.