CVS delivers strong Q2; profit climbs 16%
Woonsocket, R.I. — CVS Caremark Corp. reported a 16% profit jump for its fiscal second quarter, but the drug store operator has dropped the top end of its 2013 earnings forecast to just below Wall Street expectations.
CVS earned $1.12 billion in the second quarter, well above its year-ago profit of $966 million. Revenue rose 1.7% to $31.25 billion, surpassing the $31.14 billion forecast.
During its Tuesday morning second-quarter conference call with analysts, CVS Caremark executives said they were pleased with the “strong” operating results enterprise-wide and expressed optimism looking ahead as it continues to position itself along the front lines of health care and leverage the upcoming changes under health reform.
“We are very pleased with our strong operating results enterprise-wide in the second quarter,” said Larry Merlo, president and CEO. Yet, he said, “considering our strong operating results to date and all other factors affecting our outlook for the remainder of the year, we are narrowing our earnings guidance for 2013.”
Revenues in the retail segment rose 1.9% during the quarter. Same-store sales increased 0.4% with pharmacy same-store sales increasing 0.8%. However, it was the 0.4% dip in front-end same-store sales that caught much of the attention. Merlo indicated that the shift in the Easter holiday negatively impacted (by 65 basis points) the front end, and noted that front-store margins “expanded nicely in the quarter.”
Target to expand online beauty footprint with DermStore acquisition
Minneapolis — Target Corp. announced plans to acquire online beauty retailer DermStore for an undisclosed sum.
The move will allow Target to further tap into the online beauty market, as well as continue its trend toward acquiring specialty businesses to ramp up its presence in various niche markets. In March, Target announced its acquisition of Chefs Catalog and Cooking.com in two separate transactions to create a subsidiary.
Once this latest deal closes in about 60 days, DermStore will become a new subsidiary that will continue to operate under its online name, DermStore.com, according to Target. Current DermStore CEO Dan Obegi will become president of the subsidiary under Target’s ownership.
Men’s Wearhouse completes Joseph Abboud purchase
Fremont, Calif. — The Men’s Wearhouse has wrapped up its previously announced acquisition of Joseph Abboud (JA Apparel Corp.).
The cash transaction is valued at about $97.5 million; JA Holding will operate as a wholly owned subsidiary of The Men’s Wearhouse.