Profits up at Rite Aid
CAMP HILL, Pa. — Rite Aid's profits grew in fourth quarter and fiscal year 2013 amid stronger front-end sales and prescription count, the retail pharmacy chain said Thursday.
The company reported a $123.1 million profit for the fourth quarter and a $118.1 million profit for the fiscal year, compared with respective losses of $161.3 million and $368.6 million during the same period last year. In third quarter 2013, the company reported a profit of nearly $62 million, its first in five years, which together with the fourth quarter's results helped deliver the company's first profitable year since 2007.
Behind the results was a combination of stronger sales in Wellness-format stores, retention of most patients who switched to Rite Aid during the dispute between Walgreens and pharmacy benefit manager Express Scripts, the Wellness+ loyalty card program and increased use of generics.
"Together, we are successfully transforming Rite Aid into a true neighborhood destination for health and wellness," president, chairman and CEO John Standley said in a conference call with investors to discuss the results.
The company plans to remodel 400 more stores in fiscal year 2014, the "vast majority" of which will be remodeled according to the updated "Genuine Well-Being" format, similar to the updated Wellness store in Lemoyne, Pa., featured in a recent video on Drug Store News' website. For this purpose, $175 million of the $400 million Rite Aid plans to invest in the year has been set aside.
Sales for the fourth quarter were $6.5 billion, compared to $7.1 billion in fourth quarter 2012. Sales for fiscal year 2013 were $25.4 billion, compared to $26.1 billion in fiscal year 2012.
Same-store sales for the quarter decreased 2%, including a 0.3% increase in front-end same-store sales and a 3.1% decrease in the pharmacy. For the fiscal year, same-store sales decreased 0.3%, including a 1.4% increase in front-end same-store sales and a 1% decrease in pharmacy same-store sales. Same-store prescription count increased 3% for the quarter and 3.4% for the fiscal year.
Wall Street responded with optimism to the results. "Importantly, the underlying business, excluding the generic benefit and the Walgreen windfall, appears quite healthy," Guggenheim Partners analyst John Heinbockel wrote in a note to investors. Following the company's announcement, Rite Aid's stock was trading at $2.08 per share in late-morning trading, up by 10 cents, from the start of the trading day's $1.98.