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Rite Aid finishes tough fiscal year, but Q4 shows improvements

BY Alaric DeArment

CAMP HILL, Pa. — Sales at Rite Aid fell during fiscal year 2011, according to financial results announced Thursday, but it appears the company may have gained some momentum, reversing negative same-store sales trends in the fourth quarter.

The 4,714-store retail pharmacy chain had sales of $6.5 billion for fourth quarter 2011, which ended Feb. 26, with a net loss of $205.7 million. Still, that was less than fourth quarter 2010’s loss of $208.4 million. For the fiscal year, sales were $25.2 billion, compared with $25.7 billion in fiscal year 2010. The year saw a net loss of $555.4 million, compared with $506.7 million in 2010. During the fourth quarter, sales were flat year-over-year, at $6.5 billion.

“We made solid progress this quarter as our initiatives to grow sales and improve customer satisfaction gained momentum,” president and CEO John Standley said in a statement. “We increased same-store sales both in the front end and pharmacy and grew prescriptions in comparable stores. At the same time, our team continued to do a good job of controlling costs.”

One area in which the company is gaining some traction is the growth of its Wellness+ loyalty program, which had 36 million members as of the close of the quarter. In a conference call with investors Thursday morning, the company said Wellness+ members accounted for 67% of front-end sales and 58% of script count. It appears the new program is feeding comp-sales improvements. Same-store sales for the fourth quarter increased 0.9% over the prior-year period, with a 1% percent increase in the front end and a 0.8% increase in pharmacy. That reversed a trend of negative same-store sales in each of the first three quarters of its fiscal year that led to overall comp sales down 0.7%, driven by decreases of 0.3% and 0.9%, respectively in front-end and pharmacy same-store sales.

The company expects the situation to improve somewhat for fiscal 2012, expecting sales of between $25.7 billion and $26.1 billion and a net loss of between $370 million and $560 million. Same-store sales are expected to increase by 0.5% to 2% over fiscal 2011.

During the conference call, the company announced plans for six new wellness store format prototypes, which will feature organic and gluten-free foods and homeopathy products. Last year, Rite Aid opened three new stores, relocated 28, remodeled 19 and closed 69. According to a Pittsburgh Business Times report, the first of the new wellness stores in that city will open this Saturday and will provide immunizations for 14 diseases and products usually found in medical supply stores. More than half of the company’s pharmacists can immunize, and the chain plans to train the remaining pharmacists as well, according to the call.

The company also extended its 15-minute guarantee program to all stores outside of New York state, applying to prescriptions that don’t require authorization from the doctor or counseling, with a $5 gift card for patients if the script takes longer than 15 minutes to fill. In New York City, the company started a free delivery pilot program.

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Fred’s monthly sales rise; moves ahead with 2011 operating plan

BY Michael Johnsen

MEMPHIS — Fred’s on Thursday reported a 3% increase in sales for the five weeks ended April 2, reaching $188.8 million.

Comparable-store sales for the month rose 0.7%, versus an increase of 3.6% in the same period last year.

"Our March plan incorporated the expected impact of the calendar shift of the Easter holiday moving from March last year to April this year, along with the continuing branded-to-generic script shift occurring in pharmacy sales,” stated Bruce Efird, Fred’s CEO. “Overall, sales were on plan for the month, with the weeks preceding the Easter shift experiencing strong sales and customer traffic results. Moving into April, our programs are in place, positioning us to capitalize on the later holiday."

During March, Fred’s opened two pharmacy express locations and closed seven underperforming stores as part of its 2011 operating plan. As previously announced, the company expects to open 20 to 25 stores and 10 to 15 pharmacies during 2011, and anticipates closing a total of approximately 10 stores and five pharmacies.

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Costco sees sales gain in March

BY Allison Cerra

ISSAQUAH, Wsh. — Costco experienced a 17% increase in its monthly sales ended April 3, totaling nearly $7.2 billion.

Costco was positively impacted by the calendar shift; the company’s five-week period for March included 35 days this year, compared with 34 days last year. The wholesale retailer noted the comparable-store sales saw an 11% boost. Excluding such effects as inflation in gasoline prices and strengthening foreign currencies, which had a positive impact on comparable sales, Costco said comps would have increased 7%.

Costco noted that its five-week period included sales from the company’s Mexico joint venture. The company began consolidating its Mexico operations on a prospective basis beginning with its 2011 fiscal year. Excluding sales from its Mexico joint venture, Costco’s net sales increase would have been 14%.

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