Duane Reade updates beauty section to bolster front-end sales
NEW YORK As part of Duane Reade’s turnaround plan, the Manhattan-based pharmacy retailer has been updating its beauty department to bolster front-end sales and strengthen its position as a beauty destination. Judging by the numbers, the work appears to be paying off.
As reported by Drug Store News, the company posted during the second quarter record front-end same-store sales growth of 9.4 percent, driven in part by strong sales of cosmetics and certain beauty items.
“Our beauty category is actually outgrowing the same-store sales rate in the chain and the margin is also performing better than it was last year,” Duane Reade chairman, president and chief executive officer Rick Dreiling told analysts during a conference call on Tuesday to discuss second-quarter results. The company has been executing new cosmetic sets and introducing new skin care planograms. As part of the effort, Duane Reade is working to bring in some exclusive European beauty brands and has opted to discontinue its private label apt. 5 cosmetics line, Dreiling told Drug Store News in an interview earlier this year.
Dreiling told analysts that the company is on track to implement in the back half of the year about 30 skin care centers. It currently has four skin care centers.
“We are continuing to fine-tune the mix. The mix is significantly better than it was last year. We are looking in more of the natural area and in the ethnic area, and we are well on our way,” said Dreiling. He noted that the size of the beauty department has not changed as it works to revamp its stores, but the “commitment to the different vendors is changing based on the mix that they have to offer that fits the mix we are trying to put in the store.”
Fred’s Inc. reports 4 percent increase for 2Q
MEMPHIS, Tenn. Fred’s Inc. last week reported second-quarter sales of $424.6 million for the period ending Aug. 3, representing an increase of 4 percent. Comparable store sales for the quarter increased 0.8 percent versus the same period last year.
“Sales in July were below our expectations. Softlines, pharmacy and stationery were not as strong as we had planned, while pets and domestics were ahead of plan for the month,” commented Fred’s chief executive officer Michael Hayes on the results.
“Helping to offset slower sales, we had lower-than-planned markdowns on back-to-school supplies,” Hayes added, “and the shift to generic drugs, as we have said before, should have a largely neutral-to-positive effect on our bottom line because of the increased margin on generics.”
In July, Fred’s opened three new stores and one pharmacy. Through the first half of fiscal 2007, Fred’s has opened 16 new stores and nine pharmacies and has closed 16 stores and four pharmacies. For the full fiscal year 2007, the Company plans to open a total of 30 to 35 new stores, 15 to 25 new pharmacies, and expects to close 20 to 25 stores.
Duane Reade announces strong second quarter
NEW YORK Duane Reade announced on Tuesday that during the second quarter it experienced record front-end same-store sales thanks to strong sales of convenience, health and wellness, and beauty products.
“This growth is especially gratifying as the increase follows record front-end comp-store growth of 7.3 percent for the comparable quarter a year-ago,” stated Rick Dreiling, chairman, president and chief executive officer of Duane Reade.
Front-end same-store sales rose 9.4 percent, while pharmacy same-store sales increased 6.1 percent. Total same-store sales increased 7.9 percent. Total net sales rose 8.3 percent to $431.9 million from $398.8 million in the year-ago period.
Net loss for the quarter narrowed to $20.1 million compared with a loss in the year-ago period of $21.1 million. The current year’s second quarter results included $4.2 million of other expenses, including $1.8 million in costs related to the previously disclosed and completed accounting investigation, $1.4 million in connection with the company’s former chief executive officer, and $0.7 million of closed store costs.
Gross margin for the quarter rose to 21.1 percent from 20.3 percent last year and reflected a continuation of the improved trend of front-end margins partially offset by reduced pharmacy margins resulting from increased penetration of lower Medicare Part D sales combined with reductions in Medicaid reimbursement rates that went into effect in July 2006.
Total debt at quarter end was $560.6 million, reflecting a decrease of $11.8 million from the balance at the end of fiscal 2006.