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Sports Chalet taps Financial Profiles to be investor relations firm

BY Staff Writer

Los Angeles — Sport Chalet announced it has retained Financial Profiles as its investor relations firm.

"We have a number of important strategic initiatives in place to drive shareholder value and the time is right to step up our investor relations efforts," said Craig Levra, chairman and CFO of Sport Chalet. "We are pleased to collaborate with Financial Profiles to develop and implement a strategic investor relations program designed to build Sport Chalet’s visibility within the investment community."

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Evolving expectations keep retailers innovating

BY CSA STAFF

In the 18 months since I joined the National Retail Federation, I’ve been struck repeatedly by how rapidly our industry continues to evolve. As we all know, retail has always changed and adapted — and in just the past 20 years we’ve advanced from then-radical game changer Amazon.com to more recent models like Hointer, which boasts what amounts to online shopping in a store.

There is a distinct theme emerging around all of this evolution. In an increasingly competitive market, it’s no longer just about new technology. Instead, retailers are now looking across the enterprise at all their assets with a keen eye to leveraging the full range of infrastructure, human talent, and, yes, technology, in their arsenal. And it’s not just the sum of those assets that counts — it’s how retailers are using and adapting them to create even greater value.

Think, for example, how innovative retailers are leveraging their store design and operations to increase the role and value of the traditional store. Especially when building new stores, retailers are paying attention to the relative size of the shipping and receiving areas and how to retool “back of the house” store operations, thereby forming a network of store-level “fulfillment centers.” This infrastructure also makes it possible for local customers to place orders online and either pick up those orders in-store or have the items delivered within just hours, potentially from the store inventory.

The urgency behind all of this, of course, is keeping up with the radically changing customer — from how they adopt and use technology to the products and service they expect, with zero regard for our industry’s notions of “channels” or other traditional ways of doing things. The good news: this rapid rate of customer change is pushing us as retailers to deliver products and services so much faster and more creatively than we would otherwise. For any retailer to be truly competitive today, the pressure to continuously reinvent oneself is absolutely vital.

All of this tells me that we’re already in the midst of the next chapter in retailing, and that the next several new chapters likely lie just ahead. Retailing feels distinctly different than it did even just a few months ago. For example, when the Shop.org Think Tank met earlier this year to discuss the then-emerging topic of same-day delivery, options seemed limited for many retailers to offer this kind of service. Fast forward two months and this service is starting to find its feet as a bona fide competitive edge — whether leveraging emerging services such as Shutl or Google Shopping Express, or launching a premium “white glove” service like Sports Chalet announced recently.

The Shop.org Think Tank honed its analysis around same-day delivery, providing retailers a framework of emerging trends and strategic and tactical questions to understand the central question, “Should it be a priority for your business?” The analysis hit home for me that this is just one of many fundamental topics such as organizational structure and the in-store customer experience that our industry will be testing and fine-tuning, if not wholesale revamping, many times in the coming months.

While none of us has a crystal ball to know exactly what the future holds, the priority of the Shop.org Think Tank is to identify and produce points of view on trends, business models, technologies and strategies that are shaping the role of digital in retail right now. As we move forward in the evolution of digital commerce, my advice is to keep an open mind, watch emerging trends, set aside some budget to adopt and test quickly, and listen closely to your customers — all tenets that have kept our industry in good stead for many years.

Vicki Cantrell heads the Shop.org Think Tank and is senior vice president for communities at the National Retail Federation and executive director of NRF’s Shop.org division. You can reach Vicki at 202-783-7971, and learn more about the Shop.org Think Tank here.

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CVS’s ‘strong’ Q1 a ‘great start’

BY CSA STAFF

WOONSOCKET, R.I. — The year appears to be off to a good start and CVS Caremark executives were optimistic Wednesday morning as the company pulled in a “strong” first quarter and narrowed its 2013 guidance to reflect higher-than-expected performance.

“We are very pleased with the strong first quarter results. As expected, the influx of new generic drugs was a key driver of our year-over-year profit growth across the enterprise and, that said, both our retail and PBM segments delivered operating profit growth well above our expectations for the quarter,” Larry Merlo, president and CEO of CVS Caremark, told analysts during its quarterly conference call. “This outperformance was driven by stronger-than-expected script volumes due, in large part, to the strong flu season, strong specialty growth and favorable purchasing and rebate economics.”

Given the solid performance in the quarter ended March 31, the company raised the low end of its guidance range by 3 cents, narrowing its earnings guidance range for full year 2013 to adjusted earnings per share of between $3.89 and $4 and GAAP diluted EPS of $3.64 to $3.75.

Net revenues for the quarter decreased 0.1% to $30.76 billion, compared with the year-ago period. Income from continuing operations for the quarter rose 23.1% to $956 million during the quarter.

While it is too early for a specific 2014 selling season update, the results to date are demonstrating that the company is in “a great position in the marketplace,” Merlo told analysts.

Revenues in the pharmacy services segment rose 0.1% during the quarter, with growth primarily driven by volume increases across all channels and drug cost inflation in its specialty pharmacy business, mostly offset by the impact of new generic introductions.

Its Maintenance Choice program continues to drive interest and there are now about 16.3 million lives covered by more than 1,200 plans that have implemented, or have committed to implement, Maintenance Choice. This is up from 15.8 million lives since the company’s last update and up from 10.5 million in the year-ago period. Merlo noted that the next generation of Maintenance Choice — dubbed Maintenance Choice 2.0 — is driving much of the new growth. Maintenance Choice 2.0 includes a less restrictive or voluntary plan design option.

Meanwhile, its Pharmacy Advisor program, which is the company’s clinical program designed to address adherence and gaps in care, continues to prove successful.

“A recent study showed that about half of members who were non-adherent before participating in Pharmacy Advisor actually became adherent within a year of being in the program. In addition, there was a 5.8% decrease in the prevalence in gaps in care for diabetics, and we know that improving adherence to prescription regimens can lead to significant savings and better health,” Merlo told analysts.

In fact, Merlo said that, in 2012, the company saved clients more than $643 million in overall healthcare spending as a result of improved medication adherence for chronic conditions.

Its specialty pharmacy business continued to enjoy robust growth during the quarter with revenues increasing nearly 20% versus the year-ago period. The growth was largely driven by new PBM clients, new product launches and drug price inflation.

Specialty is the fastest growing segment of pharmacy and, by utilizing its integrated assets, CVS Caremark believes it has a unique opportunity to further improve its value proposition in the specialty field. With growing competition in pharma across many categories such as growth hormones, hepatitis C and MS, Merlo said the company has opportunities to manage formularies and rebates to benefit clients.

As for the MinuteClinic business, the operator of retail-based health clinics recorded “exceptional revenue growth” in the quarter as sales climbed up 50% compared with the year-ago period. The growth was bolstered by a strong flu season.

“In addition to treating acute patients in the quarter, we continued to develop wellness programs along with programs aimed at monitoring chronic conditions,” said Merlo. “The growth that we’ve experienced in MinuteClinic’s non-acute services is helping to reduce the seasonality of the business.”

As of the end of the quarter, the company operated 649 clinics and it plans to end 2013 with slightly less than 800 clinics.

On the retail side of the business, CVS Caremark had another “very strong” quarter and continues to gain front-store market share, Merlo said.

Revenues in the retail pharmacy segment rose 0.2% in the quarter. Same-store sales slipped 1.2%. Pharmacy same-store sales decreased 2.3%, and front-end same-store sales rose 1.4%.

The company exceeded its goal of retaining at least 60% of the scripts gained via the Walgreens-Express Scripts impasse, and Merlo remains confident that the company will be able to retain at least 60% of the scripts in 2013.

“This was a very solid quarter with strong financial results across the board and, again, the year is off to a great start,” said Merlo. “We continue to be excited by the opportunities to bring meaningful solutions to today’s healthcare challenges and we strongly believe we are very well positioned to do so.”

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