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Wellness+ loyalty program, Wellness format stores continue to lift Rite Aid performance

BY CSA STAFF

CAMP HILL, Pa. — Rite Aid maintained its same-store sales momentum, posting gains across front-end and pharmacy comparable sales for the sixth consecutive quarter: Overall same-store sales were up 2.5%, reflecting a 2.7% across the front-end and a 2.4% uptick across pharmacy, for the first quarter ended June 2.

Rite Aid’s loyalty program, Wellness+, continues to be a strong backwind helping to drive Rite Aid’s results. Members totaled 25 million for the first quarter, up 11% from the year-ago period. Three-out-of-4 front-end transactions represent a Wellness+ member and 69% of pharmacy transactions go to Wellness+ members. That compares with 67% and 62%, respectively, in the year-ago period. "Wellness+ continues to be a game-changer," Standley said.

Rite Aid’s Wellness store formats are likewise doing well and still outperforming Rite Aid’s core stores. Rite Aid operated 423 Wellness stores through quarter’s end and the Pennsylvania-based pharmacy operator plans to have 780 Wellness stores, or some 15% of its store base, up and running by year’s end. To date Rite Aid has trained as many as 600 Wellness Ambassadors to support their active engagement with Rite Aid customers in the aisles.

For the quarter, Rite Aid reported revenues of $6.5 billion (up 1.2%), with a net loss of $28.1 million, or 3 cents per diluted share, and adjusted EBITDA of $274.2 million, or 4.2% of revenues. Results benefited from continued growth in same store sales and an improvement in gross margin.

Pharmacy comp sales, though positive, included an approximate 326 basis point negative impact from new generic introductions. Many pharmacy operators, including Rite Aid, have indicated that the negative impact on same-store pharmacy sales out of the 2012 generic wave only will become greater as the year progresses.

n the first quarter, the company relocated 2 stores, remodeled 143 stores and closed 15 stores. Stores in operation at the end of the first quarter totaled 4,652.
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H&M Q2 profit beats on U.S. strength; on track to open 275 stores this year

BY Katherine Boccaccio

Stockholm, Sweden — Hennes & Mauritz AB reported Wednesday that profit for the second quarter rose 23% to $750 million, beating Wall Street estimates and marking the strongest profit increase in seven quarters for Europe’s second-largest apparel retailer.

H&M had announced on June 15 that sales for the quarter rose 15% to $4.5 billion, beating estimates and boosted by sales strength in the United States.

The retailer said it will open seven to 10 stores called “& Other Stories” in 2013 and reiterated its plans to add about 275 stores this fiscal year, with China, the United States and the United Kingdom being the largest areas for expansion.

H&M said it also sees opportunities in Germany, France, and Italy, and will start online sales in the United States in the fall.

H&M stores will open in five new markets this year and the company has signed contracts to open outlets in Estonia, and Indonesia, in 2013.

“Our expansion plan remains intact,” Karl-Johan Persson, CEO, said.

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FINANCE

Rite Aid loss narrows loss in Q1

BY Katherine Boccaccio

Camp Hill, Pa. — Rite Aid Corp. reported Thursday that it narrowed its loss in the first quarter to $28.1 million, from a loss of $63.1 million in the year-ago quarter.

Revenue rose 1.2% to $6.5 billion from $6.4 billion, edging Wall Street’s forecasted $6.47 billion in revenue.

Same-store sales increased 2.5% in the quarter.

“Our turnaround efforts continue to be successful as demonstrated by our sixth consecutive quarter of increased same-store sales,” said Rite Aid chairman, president and CEO John Standley. “The ground-breaking Wellness store format continued to gain traction.”

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