Rite Aid's March Comps Up - Analyst Blog

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Drugstore chain Rite Aid Corporation ( RAD ) posted a 3.6% increase in same-store sales (comps) for the month of March, based on strong front-end, pharmacy and prescription count comps for the month. Front-end same-store sales for the four-week period ended March 31, 2012, increased 4.6%, while pharmacy and prescription count comps were up 3.2% and 2.6%, respectively.

Pharmacy comps for March included a negative impact of around 240 basis points from new generic introductions.

Rite Aid recorded total drugstore sales of $1.989 billion in March, with prescription sales accounting for 69.2% of drugstore sales and third party prescription sales making up for 96.7% of pharmacy sales. The company's March sales represented a 3% rise from the year-ago level of $1.930 billion.

Fiscal 2011 sales, a snapshot

During fiscal 2011, the company registered a year-over-year growth of 1.5% in total drugstore sales to $26.019 billion from $25.633 billion recorded in fiscal 2010. The increase in total sales was primarily driven by a 2% growth in total comparable sales, comprising 1.1%, 2.4% and 0.9% rise in same-store sales at front-end, pharmacy and prescription counts, respectively.

Our Take

In an effort to expand its pharmacy and clinical services, Rite Aid has applied additional resources such as Wellness+ program for diabetes and Flu Immunization program. We believe these programs will enable the company to increase its customer base as well as long-term profitability.

Moreover,the company is in the process of various cost cutting initiatives including centralized indirect procurement of drugs, administrative headcounts requirement, reducing supply chain costs, reducing debt, etc. which will certainly benefit the company to improve its bottom line.

Headquartered in Camp Hill, Pennsylvania, Rite Aid is the third largest retail drugstore in the U.S. based on revenues and number of stores. The company operates in 31 states across the country and in the District of Columbia. As of March 31, 2012, the company operated 4,659 stores versus 4,711 stores in the same period last year.

Rite Aid, which competes with CVS Caremark Corporation ( CVS ) and Walgreen Co . ( WAG ), currently, holds a Zacks #3 Rank, implying a short-term 'Hold' rating on the stock. The company retains a long-term 'Neutral' recommendation on the stock.


 
CVS CAREMARK CP ( CVS ): Free Stock Analysis Report
 
RITE AID CORP ( RAD ): Free Stock Analysis Report
 
WALGREEN CO ( WAG ): Free Stock Analysis Report
 
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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

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