Fred’s hires firm to court pharmacy buyers
Memphis-based company Fred’s has hired PJ Solomon & Co. to assess the value of its pharmacy script portfolio and engage with potential buyers, the company announced alongside its Q1 2018 results Thursday.
“That process is well underway and we will provide updates as appropriate,” Fred’s interim CEO Joe Anto told analysts on a call Thursday. “Additionally, we are engaged in sale processes for various properties within our real estate portfolio and expect to have multiple transactions closed over the course of this fiscal year.”
These strategic transactions — which follow the company’s sale of its specialty pharmacy business, EntrustRx, to a CVS Health subsidiary earlier this year — are efforts the company has undertaken as part of what Anto called a “reset” after it posted a net loss of $139.3 million for fiscal year 2017. The company’s two main goals, Anto said, are eliminating its debt balance — largely accrued in the scrapped plan to acquire Rite Aid stores that would have been divested had Walgreens successfully purchased Rite Aid last year — and generating positive EBITDA and free cashflow by Q4 of this fiscal year.
For the quarter, Fred’s posted a 5.1% decline in net sales compared with last year’s Q1, bringing in $437.1 million. Comparable-store sales dipped 3.9% for the quarter — an improvement over the 4.2% decline comps saw in Q1 2017. The company’s gross profit dropped to $11.6 million, compared with $128.6 million a year ago, and gross margin as a percent of sales decreased 220 basis points to 25.5%, compared with 27.7% in Q1 2017. Fred’s posted a net loss of $19.9 million, which was an improvement on the net loss of $37.8 million it posted in the year-ago period.
Fred’s said that eating into its gross profit were direct and indirect remuneration fee increases for 2018, as well as prescription rebates from 2017 that did not recur this year and a shift in sales mix.
Fred’s saw selling, general and administrative expenses comprise 29.7% of sales — down 560 basis points from the 35.3% of sales it made up in the year-ago period. Anto noted that this reflects, in part, a decrease in the headcount at its headquarters, which currently totals roughly 274 people, compared with 440 people at the same time last year. Among those no longer in the headcount is former CEO Mike Bloom, who departed the company in April. Alongside decreasing its expenses, Anto noted that the company also has made strides in paying down its debt, with its asset-backed loan borrowings standing at $135 million as of June 12 — down from $162 million at the end of Q1 on May 5. The company’s available liquidity currently stands at $60 million.
“We expect our ABL balance to continue to decrease over the coming weeks, as we collect all remaining receivables associated with the specialty pharmacy business,” he said. “We continue to explore other strategic transactions and expect to generate additional cash proceeds which should meaningfully reduce our debt balance.”
Walmart intros Winemakers Selection collection
Walmart is tackling a whole new game.
The retailer recently announced the launch of its new Winemakers Selection collection, which includes everything from a Grenache and Sangiovese to Cabernet and Sauvignon.
Found exclusively on the shelves of 1,100 Walmart stores, the collection features wine from around the world, easy to read labels so consumers can find exactly what it is they are looking for and a price range of $10 to $16 per bottle.
Featured wines in the collection include:
- Cabernet Sauvignon, which is cultivated from Paso Robles in the heart of California’s wine region, features flavors of blackberries, cherries and plums; is best paired with red meats, stews and casseroles and carries an $11.96 price;
- Giovanni Da Verrazzano, which is sourced from Italy’s Tuscany region, contains a dry and fruity flavor, is best paired with roasted. Meats, game and rich tomato-based dishes, and also is valued at $11.96 per bottle;
- Chianti Reserva, which can be paired with red meat dishes, contains tannic, oak-aged, warm fresh and earthy flavors, stems from Italy’s oldest vineyard region and can be purchased for $15.96;
- Grenache Minervois Languedoc, which is sourced from the southern banks of Rhone River in the South of France, features fruity hints of smoke, pairs best with red meat dishes and is valued at $10.96 per bottle;
- Grenache Rose, which is produced in the Western Languedoc region of France, has fruity notes, is valued at $10.96 per bottle and pairs best with seafood dishes;
- Sangiovese Sanguis Jovis, which is cultivated from Tuscany, featured fruity aromas, pairs best with red meat dishes and is valued at $10.96 per bottle;
- Italian Red Blend, which comes from the Puglia, Abruzzo, Sicily and Veneto region in Italy, features notes of dark fruit, figs and coffee, is best paired with red meat dishes and is valued at $10.96;
- Sparkling Rose, which hails from France, contains a blend of fruit and acidity, pairs best with seafood dishes and is valued at $14.96;
- Montage Noire Francais Cabernet Franc, which is sourced from the Black Mountains in the South of France, contains a fruity flavor, paired best with roasted pork, chicken and goat cheese and is valued at $10.96; and
- Syrah Languedoc, which comes from Languedoc in France, contains a traditional red flavor, is best paired with red meat dishes and clocks in $10.96 per bottle.
Further information on the collection can be found on the retailer’s website.
HBC e-commerce company Pharmapacks raises $32.5M
E-commerce company Pharmapacks has brought in $32.5 million by selling a minority stake at an undisclosed valuation in a strategic round led by Reckitt Benckiser. Additional investments in the round came from McKesson Ventures, Sealed Air and the Emerson Group.
Islandia, N.Y.-based Pharmapacks said that its proprietary platform allows brands to reach consumers with a complete solution that includes logistics, fulfillment, marketing and sales components. Pharmapacks selles direct-to-consumer through such sites as Amazon and Walmart.com, as well as on its own website. The company touted its ability to offer emerging brands access to its consumer base, enabling brands to focus on product research and development. Pharmapacks said it strategically sets competitice price points and builds a connection between shoppers and the brand.
“We are excited to see Pharmapacks growing at a rapid pace, especially in an ecosystem monopolized by big e-commerce players,” said Andrew Vagenas, CEO of Pharmapacks. “The fundraising, together with the associated partnerships, will enable us to scale operations both domestically and internationally as well as serve our customers in an even more efficient and cost-effective manner, while expanding the number of brands we can support with our unique logistics/e-distribution capabilities.”
Pharmapacks said it would use the dunding to increase its 350-person employee base by 20% and scale its current warehouse, as well as further its automated technology and expand inventory levels and delivery reach to Europe, Asia and beyond.
“With ecommerce becoming a leading driver of growth for our brands like Enfamil, Lysol, Mucinex and Airborne, we are excited to partner and invest with Pharmapacks,” said Nitish Kapoor, executive vice president, North America, RB. “We believe that this partnership will help both companies serve our online shoppers better and grow at an even faster pace.”
Pharmapacks started seven years ago at a Bronx-based independent pharmacy. After building out its e-commerce, logistics and fulfillment software to easily integrate into existing sales platforms, the company now has a 28,000-item catalog and ships more than 30,000 orders daily.
“The Emerson Group is pleased to partner with Pharmapacks. With a shared commitment to excellence in providing our clients industry-leading capabilities and cutting-edge logistics technology, we can deliver the efficiency that is so vital to success in these challenging retail times,” said Scott Emerson, CEO of The Emerson Group. “Our alignment with Pharmapacks will help us deliver increased consumer exposure to our client brands resulting in the brand growth which is the core of our corporate mission.”
Pharmapacks’ in-house tech team is dedicated to building automated assistance tools to better streamline the fulfillment process. Its partnership with Sealed Aid is aimed at improving its throughput and reducing deployment time while cutting down on excess air and wasted space in a package..
“In addition to enhancing the consumer experience upon delivery, Sealed Air and Pharmapacks are having a positive impact on the environment by eliminating excess packaging waste, and nearly eliminating the risk of damage during transit,” said Ken Chrisman, President of Sealed Air’s Product Care division. “Pharmapacks shares our commitment to use technology and data to solve fulfillment complexities. Through the upcoming expansion, we will continue to work with Pharmapacks to provide reliable and sustainable packaging solutions that address today’s social and environmental challenges.”