Credit Suisse: December drug channel comps will be lackluster
NEW YORK — Retailers will report weak December front-end sales growth across the drug channel as continued inflation likely was offset by the slow start to the flu season and disappointing overall traffic and volume growth, Credit Suisse research analyst Ed Kelly suggested in a note published Tuesday.
"While drug stores have been fairly successful passing through product cost inflation at the shelf, our Nielsen Trend Tracker shows that volumes have decelerated in recent months given the weak consumer and normal price elasticity," he wrote.
In addition to the economy, year-over-year prescription growth was down 70 basis points for the four weeks ended Dec. 16, Kelly noted, citing IMS Health data.
Kelly projected Walgreens comparable sales will be flat for December (the chain’s monthly sales will be released Jan. 5) on account of difficult year-ago comparisons across the front end and an acceleration of lost Express Script prescriptions. Kelly expects the Express Script impact to accelerate from November — to a 200 basis point impact from the 110 basis point impact reported in November.
Kelly projected Rite Aid total same-store sales will be up between 1% and 2%, with a 0.5% lift across front-end comparable sales and a 2% lift across pharmacy sales — a projection that incorporates a negative 200 basis-point impact from new generics, such as Lipitor. Rite Aid reports December sales Jan. 4.
Kmart parent brings in a new merchandising leader
HOFFMAN ESTATES, Ill. — Kmart parent company Sears Holdings hired Ron Boire as EVP, chief merchandising officer and president of Sears and Kmart formats.
Boire, who previously was president and CEO of Brookstone, will lead merchandising and retail stores for both the Sears and Kmart brands.
"He will work with our leadership team to better serve our customers and Shop Your Way Rewards Members by integrating their experiences across our stores, online, services, and mobile capabilities," the company said.
"We are in the midst of a transformation of our business, from top to bottom, as we seek to become the leading integrated retailer in the country," Sears Holdings president and CEO Lou D’Ambrosio said. "By attracting someone with Ron’s significant experience in retail, merchandising and product development as well as in leading companies through turnarounds, we’re adding a key talent in accelerating our transformation."
The move comes shortly after Sears announced plans to close 100 to 120 Sears and Kmart stores. D’Ambrosio added, "We have made some difficult decisions recently and will make the hard choices necessary to turn our business around going forward. At the same time, we will continue to invest to better serve our customers by delivering world-class, integrated experiences across our stores, our online sites, our services and our mobile capabilities. And, we will continue to invest in our people, ensuring that we have the talent and skills necessary to effect this transformation."
100 to 120 Kmart, full-line Sears stores to close
HOFFMAN ESTATES, Ill. — Kmart’s parent company delivered some not-so-happy holiday news last week.
Sears Holdings said last Tuesday that it will close between 100 and 120 underperforming Kmart and Sears stores, following dismal holiday sales results for the brands.
The company said it has not yet identified which stores will be shuttered, but said that the closures are part of an overall plan to shift its focus from shoring up underperformers to concentrating its efforts on stronger stores.
"Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce ongoing expenses, adjust our asset base, and accelerate the transformation of our business model," Sears Holdings CEO Louis D’Ambrosio said. "These actions will better enable us to focus our investments on serving our customers."
Sears said that the store closings will generate $140 to $170 million in cash from inventory sales. It anticipates additional proceeds from the sale or sublease of real estate holdings.
The retailer had announced numerous closings this year, but this is the largest group of closings to date.