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Back-to-school season has been profitable for Amazon

BY Deena M. Amato-McCoy

SEATTLE — Based on the momentum of early back to school shoppers, Amazon is on pace to hit a record 80% sales growth for the season.

The online giant's school supplies sales have grown by 35% year-over-year in the first two weeks of the back-to-school shopping season, according to One Click Retail. Early back-to-school shopping only accounted for 9% of sales in 2016.

Last year, Amazon’s back-to-school sales hit a record 20% growth over the entire season. This year, the online giant has a total growth potential of over 80% for back-to-school 2017.

According to One Click Retail’s “Office Product” report, Amazon's sales of office products grew by 25% to reach over $2 billion in 2016, while remaining brick and mortar U.S. sales grew by only 1%. Accounting for more than 20% of total U.S. sales of office products, Amazon's double-digit growth continues into back-to-school 2017.

Sales of laptops and accessories have already earned more than $25 million. Tablet sales have nearly doubled (98% growth) and youth apparel is up by 61% over the same two weeks in 2016. Laptop accessories are up by 45%; laptops by 8% and calculators by 6%.

The online giant’s apparel sales also grew by 25% in 2016 to a value of $3.4 billion. Shoes grew more rapidly, with growth of 35% — bringing the company’s shoe sales to $1.6 billion for 2016, according to reports from One Click Retail.

Both the apparel and shoes product groups see a predictable annual shift in shopping habits during back-to-school, with parents turning to Amazon to purchase shoes and clothing for their school-aged children.

"While this early indication doesn't necessarily predict the more sales-heavy remainder of 'Back-to-School' season, it does show early velocity,” said Spencer Millerberg, One Click Retail CEO. “It paints a picture that more parents are multi-tasking on Amazon during 'back-to-school night' for those supplies vs. stopping by the store on the way home."

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CVS Health Q2 sees slight decline in retail sales, exceeds CVS Caremark expectations

BY David Salazar
WOONSOCKET, R.I. — CVS Health has reported its second quarter results, reporting $45.7 billion in net revenues — a 4.5% for the quarter ended June 30, driven largely by strong business in it pharmacy services segment, which includes its mail-order and specialty pharmacy services under its CVS Caremark pharmacy benefits manager. The company’s retail/long-term care segment performed in-line with its expectations. 
 
“The second quarter results we posted today keep us nicely on pace to achieve our full-year targets. Operating profit in the retail/LTC segment was in line with expectations while operating profit in the pharmacy services segment exceeded expectations,” CVS Health president and CEO Larry Merlo said. “At the same time, we have generated substantial free cash flow year-to-date and continued to return significant value to our shareholders through dividends and share repurchases. While we are pleased to report results consistent with our expectations, we won’t be satisfied until the total enterprise returns to healthy levels of earnings growth.”
 
Net revenues in the company’s retail/LTC segment hit $19.6 billion in Q2 — a decrease of 2.2% over the same quarter last year. The company attributes the revenue decline to a 2.6% decrease in comparable-store sales, increased generic dispensing and reimbursement pressure. 
 
Pharmacy same-store sales dropped 2.8% and saw a 410 basis point impact of new generic introductions, with same-store prescription volumes remaining flat on a 30-day equivalent basis. CVS Health said that exclusion from restricted networks had an impact of 460 basis point son same-store script volumes. The pharmacy/LTC segment’s generic dispensing rate increased 130 basis points to 87.2%
 
In the front of the store, same-store sales dropped 2.1%, reflecting a positive impact of 75 basis points attributable to the Easter holiday taking place during Q2. Same-store sales also saw the impact of softer customer traffics and the company’s efforts to rationalize promotional strategies, though this was offset by an increase in basket size. 
 
CVS Health’s pharmacy services segment saw revenue increase 9.5% in Q2, bringing in $32.3 billion. The company said the rise in revenue was driven by network claim volume, brand inflation and specialty pharmacy volume, and offset slightly by increased generic dispensing and price compression. The segment’s pharmacy network claims increased 10.3% on a 30-day equivalent basis to 376 million, which the company attributed to net new business. Mail choice claims increased 5.2% on a 30-day equivalent basis, driven by the adoption of the company’s Maintenance Choice offerings and an increase in specialty pharmacy claims. 
 
CVS health also reported a 10.2% decrease in its operating profit, offset by pharmacy network claim volume growth and specialty pharmacy growth in its pharmacy services segment, as well as a $71 million decrease in acquisition-related integration costs. The company narrowed and revised its full-year GAAP diluted earnings-per-share guidance to $4.92 to $5.02, and modified its adjusted EPS guidance to $5.83 to $5.93.
 
During Q2, CVs Health opened 27 new retail locations and closed three, relocating 10 locations. During 2017, the company said it still plans to close roughly 70 retail stores. In the first half of the year, it has closed 63 stores and taken a charge of $205 million. 
 
“Given our performance in the first half and our confidence in our expectations for the back half of this year, we are narrowing and raising the midpoint of our Adjusted EPS guidance for 2017,” Merlo said. “Additionally, our differentiated value proposition continues to resonate in the marketplace. The 2018 selling season is shaping up to be another successful one for our PBM, with solid gross and net new business achieved to date.”
 

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Hush Baby, Attitude win DSN/ECRM Buyers’ Choice Awards at baby, infant EPPS

BY DSN STAFF

Hush Baby won the ECRM/Drug Store News Buyers Choice Award for its sound-absorbing Hush Hat during ECRM’s Baby and Infant EPPS, held recently in Orlando. Attitude was a finalist for its biodegradable baby wipes.

The two companies were selected from dozens of entries in the award program, samples of which were displayed in the ECRM hospitality area during the EPPS meetings. Buyers cast their votes based on product innovation and packaging.

Hush Baby, South Ogden, Utah, was founded by a single mom, Jaycee Bybee, who developed the Hush Hat after her second child was born very sensitive to sound and would easily wake up from the slightest noise. The Hush Hat is a sound absorbing hat for babies, tested by Owens Corning Lab and developed to soften sounds that wake sleeping babies, as well as protect their hearing. According to the company, the Hush Hat helps babies nap longer at home by absorbing the startle sounds like ringing door bells, barking dog and noisy siblings. It is also suited for use outside of the home, such as in restaurants, little league games, and during travel.

Attitude is a Montreal-based company that develops all-natural sun, baby, and personal care products that are hypoallergenic and made from plant- and mineral-based ingredients. The Attitude Baby Wipes are made from plant-based materials and are biodegradable and compostable, making them as gentle on the planet as they are on a baby’s skin. They are part of Attitude’s Sensitive Skin Solution line, which offers a full range of products for babies that are certified by the National Eczema Association, enriched with colloidal oatmeal, fragrance-free, hypoallergenic and clinically tested by dermatologists.

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