FINANCE

CVS Caremark, Cardinal Health in generic drug joint venture

BY Antoinette Alexander

Woonsocket, R.I. — CVS Caremark and Cardinal Health have entered into an agreement to form the largest generic sourcing entity in the United States.

Both companies are contributing their sourcing and supply chain expertise to this 50/50 joint venture and are committing to source generic drugs through it. The companies separately announced a three-year extension through June 2019 of Cardinal Health’s existing pharmaceutical distribution agreements with CVS Caremark.

"Cardinal Health has been an outstanding strategic partner over many years, and we are excited to form this new venture with them," stated Larry Merlo, president and CEO of CVS Caremark. "This partnership will enable us to maintain our leadership role in navigating the dynamic U.S. generics market. With its combined volume and capabilities, the joint venture will develop innovative purchasing strategies with generic manufacturers and enhance supply chain efficiencies."

The U.S.-based joint venture, which is subject to customary closing conditions, is expected to be operational as soon as July 1, 2014, and will have an initial term of 10 years. Under the arrangement, the joint venture will source and negotiate generic supply contracts for both Cardinal Health and CVS Caremark. In order to reflect an equitable 50/50 joint venture, the agreement includes a quarterly payment of $25 million over the life of the agreement from Cardinal Health to CVS Caremark, the companies stated. The payments have an estimated after-tax present value of $435 million.

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The Wet Seal launches branded TV series on YouTube

BY Marianne Wilson

Foothill Ranch, Calif. — The Wet Seal announced a partnership with AwesomenessTV on reality series, "The Intern." AwesomenessTV, one of the most subscribed to video destinations for teens on YouTube, debuted the series on Nov. 25 and will air four weekly installments throughout the month of December.

The Intern, a series created exclusively for Wet Seal, has the brand’s corporate headquarters as its backdrop; and episodes follow the experience of two interns during their time with the company. The series begins with the interview selection process, and each installment thereafter features challenges for the interns, who aspire to a future in fashion.

“In partnership with AwesomenessTV, we’re thrilled to introduce teens to ‘The Intern,’ and entertain viewers by giving them a behind-the-scenes look into the Wet Seal brand,” said John Goodman, CEO of The Wet Seal. “We’re sharing the passion it takes to deliver fashion to our customers, and our interns will experience various areas of that process.”

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Report: Holiday promotions succeed in November

BY Dan Berthiaume

San Francisco — Shopper traffic and window conversion improved significantly as heavy promotions brought shoppers back out to the mall. According to analysis of nearly 25 million domestic shopping sessions during November 2013 by in-store analytics provider Euclid, average visit durations were shorter than a year ago for the fourth month in a row as the increasingly omni-channel marketplace continued to drive more focused shopping trips.

Traffic in November, defined as the number of devices detected by Euclid sensors at retail locations, increased 32.2% compared to the previous month and 20% compared to the same month last year. Shopping visits rebounded significantly after a depressed October, driven by heavy promotions that started earlier than usual and a strong Black Friday weekend with deals spread out across multiple days.

Window conversion in November, defined as the number of shoppers who enter a store as a percentage of the total foot traffic, rose to 8.8% from 6.9% last year and 8.3% in October 2013. Retailers’ early and widespread promotions during the month were successful at compelling value-conscious shoppers to make the trip to brick-and-mortar locations, with window conversion reaching a high for the year.

The percentage of shoppers who entered a store but left within five minutes ("bounce rate") was 11.7% in November 2013, up from 9% in November 2012 and 10.5% last month. Shoppers continued to be less inclined to wait in long lines or browse through additional merchandise when not finding their product/style of choice during the shortened holiday season.

Shopping session duration, defined as the mean time from store entry to store exit, was 21.9 minutes in November, a decline from 22.7 minutes last year, but an improvement from 21.5 minutes in October 2013. Despite the incremental improvement in November, durations are shorter than last year for yet another month as shoppers remain very deliberate with their trips to the store. Many shoppers are researching products extensively online before leaving the house for their visit to the mall.

In November, active repeat customers, defined as individuals returning to a store location more than once in 30 days, totaled 12% of total visits measured, up 30 basis points from the previous month, but meaningfully less than the 15.1% seen last November. Consumers opted to accomplish more shopping with each trip, likely targeting the launches of new discounts, as opposed to spreading their shopping over a greater number of trips during the month.

Deep discounts, highly attractive promotions and extended open hours successfully brought shoppers to brick-and-mortar locations during Thanksgiving Day and Black Friday this year, with traffic up 1.9% compared to the same two day period last year. Looking at Black Friday itself, traffic was actually down year-over-year (YoY) as the early start to deals on Thursday pulled many shopping trips forward. Window conversion was up 2.3% YoY for the two day period as well, nearly reaching 10% on Black Friday, as enticing deals brought crowds through the door. Counter to recent trends, average visit duration jumped 5.6% to 24.4 minutes on Black Friday as shoppers were willing to endure busy floors and long lines to capitalize on great offers. However, longer duration did not necessarily translate into larger average sales.

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