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Rite Aid's February Comps Decline - Analyst Blog

Posted: 3/11/2013 2:12:00 PM
Referenced Stocks: ABC;CAH;CVS;RAD

Drugstore chain retailer, Rite Aid Corporation 's ( RAD ) same-store sales (comps) for the five weeks ended Mar 2, 2013 decreased 3.6%. The decline was primarily due to a fall in front-end comps as well as in pharmacy comps.

Rite Aid's front-end comps inched down 1.3% while flu-related over-the-counter product comps remained flat. Despite a 0.3% increase in prescription counts at comparable stores, Pharmacy comps for February declined 4.7%. Pharmacy comps for the month was adversely impacted by about 695 basis points due to the introduction of new generic drugs. During the period, the decline in prescription count comprised of a 0.1% decline in flu-related prescriptions and flu shots.

This Zacks Rank #1 (Strong Buy) company reported total drugstore sales of $2.457 billion for the month, with prescription sales accounting for 67.7% of drugstore sales and third-party prescription sales making up for 96.9% of pharmacy sales. The company's February sales declined 3.7% from the year-ago level of $2.551 billion.

For the fiscal 2013 fourth quarter ended on Mar 2, the company's comps declined 2.0% primarily due to a fall of 3.1% in Pharmacy comps partially offset by an increase of 0.3%. During the period, total drugstore sales declined 2.4% to $6.425 billion compared with $6.585 billion in the fourth quarter of 2012.

Prescription sales comprised 66.5% of total drugstore sales, while prescription counts increased 3.0% in the fourth quarter. Additionally, third-party prescription sales accounted for 96.6% of pharmacy sales.

Fiscal 2013, i.e. for the 52-week period ended on Mar 2, the company's comps were down by a 0.3%, while total drugstore sales slipped 0.9% year over year to $25.284 billion. The decrease in comps was mainly due to a marginal fall of 1.0% in pharmacy comps partially offset by a 1.4% rise in front-end comps.

Prescription sales comprised 67.6% of total drugstore sales, while prescription count at comparable stores climbed 3.4% in fiscal 2013. Additionally, third-party prescription sales accounted for 96.6% of pharmacy sales.

Other Stocks to Consider

Other drug store stocks that are performing well include CVS Caremark Corporation ( CVS ), AmerisourceBergen Corporation ( ABC ) and Cardinal Health Inc. ( CAH ). All these companies currently have a Zacks Rank #2 (Buy).

AMERISOURCEBRGN (ABC): Free Stock Analysis Report

CARDINAL HEALTH (CAH): Free Stock Analysis Report

CVS CAREMARK CP (CVS): Free Stock Analysis Report

RITE AID CORP (RAD): Free Stock Analysis Report

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