Rite Aid Q3 income jumps; to add 300 new GNC LiveWell in-store shops
Camp Hill, Pa. – Rite Aid reported a solid 15.5% increase in net income during the third quarter of fiscal 2013, to $71.5 million from $61.9 million in the year ago period. Lower interest expense and lease termination and impairment charges helped drive Rite Aid’s net income growth.
In addition, revenues grew about 2% to $6.4 billion from $6.2 billion, primarily due to a 3.5% increase in pharmacy same store sales. Same-store sales rose 2.3%.
Rite Aid said it has reached an agreement with GNC to extend and expands their existing partnership through 2019. The agreement enables Rite Aid to add at least 300 additional GNC LiveWell store-within-a-store locations inside its stores during the next five years.
Rite Aid and GNC have had an exclusive partnership in the chain drug channel since December 1998. As of Dec. 19, there are more than 2,200 GNC stores-within-a-store operating in Rite Aid stores across the country, including a majority of Rite Aid wellness stores.
Rite Aid has updated its fiscal 2014 guidance with sales expected to be between $25.3 billion and $25.425 billion and same store sales to range from an increase of 0.35% to 0.85% compared to fiscal 2013.
Rite Aid gaining momentum for 2014
Rite Aid modestly increased its full year sales forecast following the release of third quarter results and said it will aggressively expand its “Wellness” format as it looks to drive greater growth in 2014.
The company said it expects to spend $415 million next year to pursue the most aggressive expansion to date of its Wellness concept that was introduced in early 2011. Currently, 1,117 of Rite Aid’s 4,595 stores are in the Wellness format, but that number will grow by 415 units in 2014 as the company spends $415 million to remodel 400 stores, relocate 14 others and open one new store.
“Our solid third quarter results were driven by the continued success of our key wellness initiatives, specifically the strong start to our flu immunization campaign, and the completion of additional Wellness stores, which now represent nearly a quarter of all Rite Aid stores,” said Rite Aid chairman and CEO John Standley.
In addition to expansion of the Wellness concept, Rite Aid said it extended a relationship with GNC to add 300 more GNC LiveWell store-within-a-store departments to the roughly 2,200 it already has. Rite Aid and GNC have had an exclusive partnership in the chain drug channel since December 1998.
"Rite Aid’s strategic partnership with GNC is a point of differentiation, both in the chain drug industry and with our customers," said Ken Martindale, Rite Aid president and COO. "With the extension of our retail agreement with GNC, we will be able to continue bringing our customers the outstanding lineup of highly popular GNC products they trust while delivering on our mission of helping our customers meet their unique health and wellness needs."
The growth objectives were detailed in conjunction with the release of third quarter results which saw the company slightly elevate its full year sales forecast and while lowering its profit outlook.
Rite Aid said sales for its third quarter ended November 30, increased 1.9% to nearly $6.4 billion thanks to a 2.3% increase in same store sales comprised of 3.5% same store growth in the pharmacy offset by a 0.2% decline in non-pharmacy same store sales. Net income increased 15.6% to $71.5 million, while earnings per share declined to four cents from seven cents due to a larger number of outstanding shares.
The company reduced its full year earnings outlook to a range of 17 cents to 23 cents from an earlier forecast of 18 cents to 27 cents. However, sales are forecast to total between $25.3 billion and $25.425 billion compared to a slightly lower forecast range of $25.1 billion to $25.3 billion.
Report: Wal-Mart most prolific and most creative holiday advertiser
Mountain View, Calif. – Wal-Mart is this year’s most prolific holiday advertiser in terms of new creative, airing more than 40 unique holiday-themed ads. According to new Ace Metrix TV and video advertising ratings, a philanthropic ad spotlighting its Salvation Army program also earned Wal-Mart a number one ranking in terms of creative effectiveness, with a leading Ace Metrix score of 687.
Two other retailers also had ads in the top 10 rankings. Kohl’s took eighth place with its “Christmas Surprise” ad (Ace Metrix score 639) and Lowe’s ranked 10th with “It’s Easy (635).
“While consumers have a tendency to reward philanthropic work, this holiday season saw more do-good creative at the top than ever before,” said Peter Daboll, Ace Metrix CEO. “What stands out in this year’s philanthropic effort is the authenticity of the brand to the cause. Walmart and Duracell are true to their brand while communicating the values of the season. In fact, many of the ads on this list are successful because they effectively impart values of family, giving and togetherness.”