CVS Health in Q2 loss but still beats Street
CVS Health’s second-quarter revenue and earnings topped the Street amid growth in prescription volume and its pharmacy benefit management business.
The company swung to a net loss of $2.56 billion, or $2.52 a share in the period ended June 30, from a profit of $1.10 billion, or $1.07 a share, in the year-ago period. Excluding non-recurring items, such as a $3.9 billion goodwill impairment charge related to its long-term care business, adjusted earnings per share were $1.69, above analysts’ estimates of $1.61.
Total revenue grew 2.2% to $46.71 billion, above estimates of $46.32 billion. Same-store sales increased 5.9%.
Revenues in the pharmacy services segment increased 2.8% to approximately $33.2 billion. Revenue from CVS’ retail pharmacy segment rose 5.7% to $20.7 billion, with an 8.3% increase in pharmacy revenue amid increased prescription volume. Front-end sales inched up 0.2%. Same-store prescription volume increased 9.5%. Front-store same-store sales fell 1%, which the chain attributed to softer customer traffic and the shift of the Easter holiday to the first quarter as opposed to the second quarter last year.
“Our solid performance both in the quarter and year-to-date demonstrates our ability to drive value. It also builds upon a strong foundation for a seamless integration of CVS and Aetna with one goal: to transform the consumer health care experience and, by doing so, deliver long-term profitable growth for shareholders,” said CVS Health president and CEO Larry Merlo.
CVS expects its roughly $69 billion acquisition of health insurer giant Aetna to close in the late third quarter or early part of the fourth quarter.
“The genuine enthusiasm and the depth of talent throughout the CVS and Aetna organizations will be key assets as we focus on realizing the potential of our combination,” Merlo said.
Analyst Neil Saunders, managing director of GlobalData Retail, commented that while the healthcare and pharmacy side of the CVS business will allow it to succeed, the company is nowhere near maximizing its potential when it comes to retail.
“Store environments are dingy, inspiration is lacking, merchandising and shop-keeping standards are generally sloppy, and the offer is bitty and fragmented,” Saunders said. “With a little care and attention, CVS could turn these things around, but the company never seems to bother.” For more of his comments, click here.
Jewelry chain files Chapter 11—again
A Texas-based jewelry retailer has filed for bankruptcy protection amid a legal probe of its Indian-based parent company.
Samuels Jewelers said that its approximately 122 stores and its e-commerce site will remain open for business as the company seeks to restructure its finances while continuing normal business operations. The retailer, which listed liabilities between $100 million and $500 in its Chapter 11 filing, said it expects the restructuring process will enable it to significantly reduce its outstanding debt.
“We are confident that we are taking the right steps for Samuels Jewelers,” said Farhad Wadia, CEO, Samuels Jewelers, which operates stores under the Samuels Diamonds, Samuels Jewelers, Schubach Jewelers, Rogers Jewelers, and Andrews Jewelers banners.
“Our customers around the U.S. can continue to count on an outstanding shopping experience and excellent service whenever, wherever and however they choose to shop with us. As we prepare for another holiday season, our national team members are ready to serve the families who will be shopping with us.”
Samuel Jewelers is owned by India’s Gitanjali Gems Ltd., whose chairman Mehul Chinubhai and his nephew, jewelry designer Nirav Modi, are wanted by the Indian authorities in connection with an alleged $2 billion bank fraud against the country’s Punjab National Bank. They fled India before the charges against them were filed, according to Reuters. A special Indian court issued warrants against the pair—both of whom have denied the allegations—last month.
Samuel’s first filed for Chapter 11 in 1992, when it was owned by Barry’s Jewelers, and did so again in 1997. In 1998, the company changed its name to Samuels Jewelers, and sold a majority stake to DDJ Capital Management. It filed again in 2003. In 2006, it was acquired by its present owner.
NRF: New round of tariffs will ‘throw away” tax reform benefits
The Trump administration’s plant to impose a 25% tariff on another $16 billion worth of imports from China starting Aug. 23 drew an immediate reaction from a leading retail organization.
“This is just another step toward throwing away the benefits of tax reform that have given our nation’s economy a badly needed boost,” said Matthew Shay, president and CEO, NRF. “These tariffs might be part of an effort to bring about fair trade with China, but as we’ve said before all we have seen so far is a huge risk for American consumers and workers with no endgame in sight. It’s time to stop digging a deeper hole while we can still climb out.”
In response to the administration’s announcement, the Chinese Ministry of Commerce announced that China would impose an equal tariff of 25% on $16 billion worth of U.S. goods coming into China.
The new set of measures are the second round of tariffs that President Donald Trump originally announced in March. An initial round of tariffs on $34 billion worth of Chinese imports that went into effect in early July.