Drugstore chain retailer,
Rite Aid Corporation
) same-store sales (comps) for the 4 weeks ended Apr 27, 2013
slid 4.0%. The fall was due to a decline in pharmacy as well as
Pharmacy comps for April fell 4.2% primarily due to a negative
impact of approximately 454 basis points from generic drug
introductions and a 0.2% drop in prescription counts. Further, an
earlier shift in the timing of Easter caused a lapse of 3.5% at
the company's front-end comps.
Rite Aid reported total drugstore sales of $1.902 billion for
the month, with prescription sales accounting for 67.9% of
drugstore sales and third-party prescription sales constituting
96.9% of pharmacy sales. The company's April drugstore sales fell
4.6% from the year-ago level of $1.993 billion.
For the 8-week period ended on Apr 27, Rite Aid's comps
decreased 3.0% primarily due to a fall of 4.4% in Pharmacy comps,
partially offset by an increase of 0.1% at front-end comps. In
the said period, total drugstore sales decreased 3.5% to $3.841
billion from $3.982 billion in the comparable period of 2012.
Prescription sales comprised 67.7% of total drugstore sales,
while prescription counts nudged up 0.1%. Additionally,
third-party prescription sales constituted 97.0% of the pharmacy
Rite Aid, which trails
CVS Caremark Corp.
) in terms of store count, has persistently witnessed a
decreasing sales trend over several quarters due to the
introduction of lower cost generic (non-brand) drugs. Generic
drugs are less expensive but generate higher gross margins for
the company. This is evident from the fact that in the fourth
quarter of fiscal 2013, generic medications were the primary
drivers of margin expansion. Going forward, this Zacks Rank #2
(Buy) stock is likely to focus on expanding its portfolio of
generic medications as the demand for generic drugs is growing
However, Rite Aid's generic drug sales could be adversely
Wal-Mart Stores Inc
) entrance into the retail generic drug market. Due to Wal-Mart's
wide array of manufacturers in India, Israel, and the U.S., the
mass merchant can offer generic drugs at a more discounted price
compared with the average $10.00 generic drug co-pay.
CVS CAREMARK CP (CVS): Free Stock Analysis
RITE AID CORP (RAD): Free Stock Analysis
WALGREEN CO (WAG): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
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