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Wegmans working with local food banks, American Red Cross on food and ice distributions

BY Michael Johnsen

ROCHESTER, N.Y. — Wegmans Food Markets on Monday announced it has worked closely with the Monmouth County Food Bank and the American Red Cross in New Jersey on food and ice distributions since Hurricane Sandy came through the area last week. 

“I have stayed in close touch with both organizations on a daily basis to understand their needs, and I will continue to do so,” stated Linda Lovejoy, Wegmans’ community relations manager. “We have always worked closely with food banks and disaster relief agencies so that we can react quickly when disaster strikes.”

Lovejoy also noted that in affected areas of Pennsylvania where Wegmans has stores, individual stores have donated food and ice directly to agencies that are operating emergency shelters.

"Rather than implement a separate scanning program for Hurricane Sandy, we are reminding our customers that by giving at check out to their local food bank, they are, in fact, helping the entire food relief system help the victims of Hurricane Sandy throughout the Northeast," Lovejoy noted. "Food banks will help today, but also in the weeks and months to come.”

To date, Wegmans delivered three truckloads of food to MCFB, with an additional truckload to be delivered Tuesday and three truckloads of food and ice to the American Red Cross central distribution facility in New Jersey. The combined value of the donation is approximately $200,000. 

Wegmans operates seven stores in New Jersey, two of which are in Monmouth County, an area severely impacted by the hurricane. 

All 81 of Wegmans stores in New York, New Jersey, Pennsylvania, Maryland, Virginia and Massachusetts were able to stay open and stocked throughout the storm and its aftermath as a result of advance planning, Lovejoy said. Generators were used to power stores in areas where utility power failed, and Wegmans’ merchants planned ahead with vendors to have an adequate supply of the most in-demand products. 

Wegmans also was able to successfully deliver orders to its stores. All stores are now back on utility power and have resumed their regular hours of operation, the company reported. 

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Strong 3Q, ability to retain ESI patients, finds CVS Caremark execs bullish

BY DSN STAFF

WOONSOCKET, R.I. — Coming off a strong third quarter, CVS Caremark executives expressed confidence that the company’s integrated retail/pharmacy benefit manager model and the unique programs and services it is able to deliver customers and clients are “making the difference,” president and CEO Larry Merlo told analysts during a Tuesday morning earnings call.

The results have been strong revenue growth on both sides of the enterprise, Merlo noted, with sales in its pharmacy services business up 22.2% to $18.1 billion for the third quarter ended Sept. 30, and sales in its stores up 5.5% to $15.5 billion. As a result of over-performing its expectations in the quarter — and also its increased optimism that it would retain a greater percentage than originally expected of Express Scripts patients in the aftermath of the now-settled, Walgreens-ESI dispute — Merlo told analysts the company raised and narrowed its earnings guidance for the year, from $3.38 per share to $3.41.

In the stores, comparable sales rose 4.3%, with pharmacy comps up 5.3% during the quarter, driven by strong prescription growth. Script volumes rose 8.7% when 90-day prescriptions were counted as one script, and up 11.1% when counted as three. Merlo attributed the growth to “healthy underlying growth in key drug classes,” and certain market fundamentals that impact the entire industry, including an uptick in physician visits, continued growth of Medicare Part D and greater use of maintenance medications driven by greater use of generics.

But Merlo also noted that a substantial chunk of that had come from ESI patients that had come over from Walgreens, which produced a bump of 400 to 430 basis points — or roughly 6.5 million to 7 million scripts during the quarter. Importantly, the lift also came on the front-end of its business, where former Walgreens-ESI patients contributed 150 basis points to front-end comparable sales, which were up 2.2% during the quarter. In all, Merlo said the company now expects that it will be able to retain as much as 60% of the former Walgreens-ESI patients in the fourth quarter, up from its previous guidance of 50% following its second-quarter results.

"We are encouraged by the increased confidence in script retention, and we believe the stock will be up today despite cautious 2013 commentary from [Express Scripts] after market close yesterday," Citigroup analyst Deborah Weinswig wrote in a Nov. 6 research note. In a late Monday call with analysts, Express Scripts CEO George Paz noted that concerns about the economy were weighing on his company’s performance.

On the PBM side of the business, Merlo said the company continued to make good progress on the 2013 selling season, with roughly 75% of client renewals completed to date and about a 96% retention rate overall.

Importantly, the company continued to gain traction with new existing clients on what Merlo described as two of CVS Caremark’s “integration sweet spot programs,” namely Maintenance Choice and Pharmacy Advisor. Maintenance Choice now boasts some 14.5 million lives covered by 1,040 plans up from 10.7 million a year ago, which includes a growing number of clients that have embraced the Maintenance 2.0 offering, which features a less restrictive plan design.

Meanwhile, 900 clients representing some 16.3 million lives are engaged in its Pharmacy Advisor program for diabetes, and another 600 clients numbering 11 million lives in Pharmacy Advisor cardio program. The company expects to introduce five more Pharmacy Advisor programs for chronic diseases in 2013, as well as launch a special program for Medicare clients, Merlo said.

Importantly, both of these programs tie in both sides of the operation, with a benefit to both its stores and its PBM businesses.

Merlo also expressed optimism for its growing Medicare business. With open enrollment for Part D running until Dec. 7, and CVS Caremark’s PDP qualifying in 30-of-33 regions in which it competes, the company is confident it will continue to grow share here as well.

Another key growth driver for the pharmacy services segment of its business came from specialty pharmacy revenues, which were up 34% during the quarter, driven by new PBM clients, drug cost inflation and new product launches.

Back on the retail side of the business, Merlo noted that MinuteClinic revenues grew 43% during the quarter, and the company added 25 new clinics for a total of 609 as of Sept. 30.

ExtraCare, the company’s industry-leading loyalty program, also continues to contribute significantly to sales in the retail business. Merlo described the program not as a “customer acquisition tool” but more so as a highly effective “customer retention tool,” noting that the program had delivered some $2.7 billion in value to ExtraCare cardholders to date in 2012. CVS/pharmacy president Mark Cosby described the program, with some 70 million active cardholders, as “a huge piece of our past and a big part of our future.”

In particular, Cosby noted the growth of its ExtraCare Beauty Club program — now in its second year and numbering some 10 million participants — and its continual digitization efforts as two key ways in which the company continues to create more personalized offers and communications via ExtraCare.

Looking ahead, Merlo noted during the Election Day call that regardless of the outcome of the presidential race, the company is well-positioned to take advantage regardless of the direction healthcare reform inevitably takes in the months and years ahead.

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Kmart, Sears offer free shipping on some orders

BY Alaric DeArment

HOFFMAN ESTATES, Ill. — Kmart and Sears are offering free shipping for certain online orders as the holiday shopping season approaches.

Sears Holdings, the company that operates the two chains, said customers with orders of $49 or more from Kmart.com, Sears.com and MyGofer.com can receive free shipping. The company cited a recent "Sears Online Holiday Shopping Survey" that found most online shoppers listed shipping costs as their primary frustration with buying gifts online.

Members of the Shop Your Way loyalty program also can upgrade their account to a Shop Your Way Max membership for $79 per year and receive free two-day shipping on many Kmart and Sears mailable items and receive faster shipping upgrades for 99 cents, as well as unlimited free standard shipping and double points for other items.

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