Rite Aid's July Comps Improve - Analyst Blog


Drugstore chain retailer, Rite Aid Corporation ( RAD ) reported marginal growth in comparable-store sales for Jul 2013. The company's comps for the 4-week period ended Jul 27, 2013 inched up 1.3% over the prior-year period, primarily driven by improved comps results at its pharmacy and front-end stores.

Pharmacy comps for July were up 1.6%, which included a negative impact of nearly 307 basis points from generic drug introductions. The results were also aided by a 0.4% rise in prescription counts. Additionally, the company's front-end comps rose 0.7%.

Rite Aid reported total drugstore sales of $1.898 billion for the month, up 0.9% from the year-ago figure of $1.881 billion. Prescription sales constituted 67.7% of total drugstore sales. Third-party prescription sales accounted for 97.0% of pharmacy sales.

For the 21-week period ended Jul 27, Rite Aid's comps decreased 1.2% from the prior-year period. The fall was primarily due to a 1.9% drop in pharmacy comps, partially offset by 0.4% rise in front-end comps. Prescription count at comparable stores remained flat year over year

In the period, total drugstore sales fell 1.5% to $10.089 billion from $10.247 billion in the comparable period of 2012. Prescription sales comprised 67.5% of total drugstore sales. Additionally, third-party prescription sales constituted 97.0% of pharmacy sales.

Rite Aid, which trails Walgreen Co. ( WAG ) and CVS Caremark Corp. ( CVS ) in terms of store count, has persistently witnessed a downward sales trend over several quarters due to the introduction of lower cost generic (non-brand) drugs. Such non-branded drugs are less expensive in the market but generate higher gross margins for the company.

This is evident from Rite Aid's performance in first-quarter fiscal 2014, when generic medication primarily drove its margin expansion. Going forward, this Zacks Rank #3 (Hold) stock is likely to focus on expanding its portfolio of generic medication, given the growing demand for such drugs.

However, Rite Aid's generic drug sales could be dented by Wal-Mart Stores Inc. 's ( WMT ) entry 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 the particular drugs at a more discounted price when compared to the average $10.00 generic drug co-pay.

CVS CAREMARK CP (CVS): Free Stock Analysis Report

RITE AID CORP (RAD): Free Stock Analysis Report

WALGREEN CO (WAG): Free Stock Analysis Report

WAL-MART STORES (WMT): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CVS , RAD , WAG , WMT



More from Zacks.com:

Related Videos



Most Active by Volume

  • $15.56 ▼ 1.46%
  • $7.62 ▼ 1.93%
  • $27.25 ▼ 0.11%
  • $124.75 ▼ 1.13%
  • $8.79 ▲ 1.27%
  • $58.42 ▼ 2.09%
  • $41.615 ▼ 1.29%
  • $106.01 ▼ 1.56%
As of 4/17/2015, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com