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Sears Holdings narrows losses in Q4, FY2012

BY Alaric DeArment

HOFFMAN ESTATES, Ill. — Kmart’s comps declined 3.7% for the fourth quarter and fiscal year 2012, while parent company Sears Holdings’ integrated online business grew by 25% for the quarter and 17% for the year, Sears Holdings said Thursday.

Sears’ U.S. stores, on the other hand, posted a 0.8% increase in comps for the fourth quarter and a 1.4% decrease for the year, while the company’s Canadian stores saw comps decline by 3.8% for the quarter and 5.6% for the year.

Members of the Shop Your Way loyalty program drive more than 50% of sales at Sears’ U.S. stores and at Kmart for the quarter and year as the company posted a $489 million loss for the quarter and $930 million for the year, compared with respective losses of $2.4 billion and $3.1 billion last year.

In a letter to shareholders Thursday, chairman and CEO Edward Lampert touted the Shop Your Way program as "more than just a typical loyalty program" and highlighted its role in transitioning Sears to a membership-based company. "It is a comprehensive platform that transforms customer transactions into relationships and allows us to know our Members better and to serve them better as well," Lampert wrote. "It includes the rewards program, our shopyourway.com social shopping platform, our SHOP YOUR WAY Max free shipping platform and a variety of other applications and components. Collectively, these elements change the way we do business both inside and outside the company."

Sears Holdings’ sales for the quarter were $12.3 billion, compared with $12.5 billion in fourth-quarter 2011, while sales were $39.9 billion for the fiscal year, compared with $41.6 billion in fiscal year 2011.

"Sears Holdings made progress in 2012 improving the profitability of our business, but we know there’s more work to be done in 2013," Lampert said; former CEO Lou D’Ambrosio stepped down as CEO in January due to family health matters. "Our focus continues to be on our core customers, our members and finding ways to provide them value and convenience through integrated retail and our Shop Your Way membership platform. We have invested significantly in our online e-commerce platforms, our membership rewards program and the technology needed to support these initiatives." 

The company attributed the decrease in Kmart’s comps to a "significant" decrease in the consumer electronics category, as well as declines in the grocery, household and pharmacy categories, with the pharmacy decline reflecting the generic drug wave.

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NCPA provides insight on addressing waste, fraud and abuse in health care to House subcommittee

BY Michael Johnsen

ALEXANDRIA, Va. — The National Community Pharmacists Association on Wednesday submitted a statement for the record to the U.S. House Energy and Commerce Health Subcommittee for its hearing on “Fostering Innovation to Fight Waste, Fraud and Abuse in Health Care.” NCPA’s statement called for pharmacy audits to focus on true waste, fraud and abuse as opposed to clerical errors, and for policymakers to examine mail-order waste in federal health programs. 

“The fiscal integrity of government programs requires finding effective and efficient ways of rooting out fraud, waste and abuse,” stated NCPA CEO Douglas Hoey. “When the right patient receives the right medication as prescribed, at the right time and for the correct price, that shouldn’t be a punishable offense. Pharmacy audits should focus on finding real malfeasance. Instead, clerical errors are being utilized to pad the middleman’s profits on the backs of healthcare providers," he said. "In addition, policymakers must achieve greater oversight of waste generated by mail-order autoshipping as well as transparency to better manage and evaluate contracts with pharmacy benefit managers.”

NCPA’s statement noted that nearly half (43.6%) of claims deemed to be overpayments were reversed in favor of providers upon appeal.

And Medicare acknowledges egregious pharmacy auditing, noting in the 2014 draft Call Letter that, “[t]he increasing incidence of these adjustments for ‘routine clerical errors’ rather than incorrect payment amounts (financial errors) may be related to the incentives in contingency reimbursement arrangements with claim audit vendors.” They added, “[w]e are concerned that the growing practice of post-audit total claim recoupments from pharmacies is distorting Part D payment, as well as compromising Part D data integrity and impairing our ability to oversee the program.”

NCPA added that waste through mail order auto-shipping is rampant. Medicare has received complaints from beneficiaries about auto-shipping of excessive or unneeded medical products and has documented such incidences. Recently, in front of the House Small Business Committee, a Medicare official testified that from a selected group of beneficiaries that ceased ordering DTS in 2011, 60% of these beneficiaries had more than 10 months’ worth of diabetes testing supplies on hand, likely as a result of mail-order autoshipping. In addition, NCPA strongly encourages an audit of the TRICARE mail-order program, given the many examples of mail-order waste observed by NCPA members.

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Ahold to roll out more Peapod pickup points in 2013

BY Alaric DeArment

AMSTERDAM — Keeping stores open during Hurricane Sandy was one of the factors that contributed to an increase in total store sales and comps in the fourth quarter and fiscal year 2012 for Ahold USA, the supermarket operator’s Dutch parent company said Thursday.

Ahold attributed its 4.3% increase in sales in the fourth quarter, to $6.1 billion, partially to the Hurricane Sandy effort. The quarter also saw comps increase by 2.4%, while full year sales were $25.8 billion, a 3.1% over 2011, as comps increased by 1.4%.

The company opened eight pickup points for Peapod, its online grocery service, in 2012, and opened a ninth one in New York on Wednesday, CEO Dick Boer said in a conference with analysts in Amsterdam Thursday to announce the results. The company is planning a further rollout of pickup points in the United States in 2013. The company also hopes to have 40% private-label penetration by 2016.

Other highlights included strong growth in loyalty programs, with 8-in-10 primary shoppers now participating. The presentation Thursday included a video introducing the program, which has allowed Ahold banners like Stop & Shop to collect data that it uses to adjust inventory. This includes the use of an in-house analytical tool called SKUBA — short for SKU Business Analyzer — which does a "deep dive" into each store’s product assortment and allows managers to understand whether anything needs to be different by region, demographic or geography.

In addition, the company expressed satisfaction with the performance of 15 former Genuardi’s stores in the Philadelphia area purchased from Safeway, which have since been converted to the Giant-Carlisle banner, as well as highlighting the rollout of ScanIt! Mobile to all of Stop & Shop stores and Giant-Landover’s acquisition and conversion of two Fresh & Green’s stores. 

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