Rite Aid swings to Q2 profit; lifts view
Camp Hill, Pa. — Rite Aid Corp. reported that it swung to profit in the second-quarter profit, fueled by increased sales and stronger margins. The drugstore chain raised its full-year forecast.
Rite Aid reported a profit of $32.8 million for the quarter ended Aug. 31, compared with a year-earlier loss of $38.8 million. It was the chain’s fourth-straight quarterly profit.
Sales for the quarter were $6.3 billion, up from $6.2 billion in the year ago period. Same-store sales were up by 1%,
“We posted excellent results in the second quarter, highlighted by another quarter of net income and an all-time company record for second-quarter Adjusted EBITDA,” said Rite Aid chairman and CEO John Standley. “As we continue to improve our operational and financial performance, we are also making tremendous progress in transforming our more than 4,600 stores into true neighborhood destinations for health and wellness, as indicated by our successful launch of the wellness65+ loyalty program for seniors, a strong start to our flu immunization campaign and the completion of our 1,000th wellness store remodel.”
Rite Aid enjoys fourth-consecutive profitable quarter
Rite Aid reached a milestone in its store conversions and saw growth in the latest expansion to its loyalty program as it posted its fourth-consecutive profitable quarter.
During the second quarter of fiscal year 2014, the number of stores in the chain that have been converted to the Wellness and Genuine Well-Being formats surpassed the 1,000 mark, with the total number of stores converted totaling 1,019 — including 114 under the newer Genuine Well-Being format — and expected to reach 1,200 by the end of the year.
In a conference call with financial analysts to announce the quarter’s results, CFO Frank Vitrano said Wellness stores’ front-end same-store sales led non-Wellness stores’ by 3.4%, while same-store script count led by 0.9%. One key part of the Wellness format is the Wellness Ambassadors, specially trained staff who help customers with questions they have about health and wellness products and also help to funnel them toward the pharmacy; as of the end of the quarter, there were 1,700 Wellness Ambassadors working in stores.
Wellness65+, a supplement to the Wellness+ loyalty card program aimed at elderly customers, had 930,000 members enrolled as of the end of the quarter, and president and COO Ken Martindale said that seniors had been "very receptive" to it. Part of the promotional efforts around the program included a tour around the country, with 65 events in eight markets, thus allowing employees to build relationships with senior customers. Other wellness-related programs include flu vaccinations, and chairman and CEO John Standley said they were off to a "strong start" in the 2013-2014 flu season; the company aims to vaccinate 2.5 million people during the fiscal year.
As the chain cycles through the customers it gained during the dispute last year between Walgreens and Express Scripts, same-store script count was flat compared with second-quarter 2013, but offset by organic script count growth. Pharmacy same-store sales were up by 1.7% and included a 2.5% negative effect from new generic introductions. Standley said during the call that new generics have been stronger than expected, but cost increases for generics have also been higher, and the company expects that to put pressure on the company’s guidance over the next two quarters.
Sales for the quarter were $6.3 billion, up from $6.2 billion in second quarter 2013, while profits were $32.8 million, compared with a $38.8 million loss a year ago. Same-store sales were up by 1%, including the aforementioned increase in pharmacy comps and a 0.3% decrease in front-end comps. The chain operated 4,604 stores.
OfficeMax unveils digital collaboration center
OfficeMax has opened Digital IC2, a digital innovation collaboration center, in its headquarters in Naperville, Ill.
“I am extremely pleased to introduce our new Digital Innovation Collaboration Center, yet another key milestone demonstrating the overall progress of our Digital initiatives," said president and CEO Ravi Saligram. “The new center is aimed at fostering the creativity, collaboration and real-time innovation needed to expedite the delivery of digital solutions that expand upon our multichannel capabilities to better serve the rapidly changing ways that customers shop.”
The Digital IC2 was designed with direct input from digital associates to create a space that facilitates team communication and creativity based on the digital teams’ work styles to help bring innovation to market. The center is part of OfficeMax’s strategic plan to create “a differentiated customer experience through next-generation digital innovation and enhancements.”
“OfficeMax is committed to expanding upon the award-winning digital experience that our customers have come to expect,” said Jim Barr, OfficeMax executive vice president and chief digital officer. “The OfficeMax Digital Innovation Collaboration Center is a highly interactive working environment that enables real-time innovation and ideation to help strengthen our position within the e-commerce and omni-channel landscape.”