Back to top

Analyst Blog

Drugstore chain retailer, Rite Aid Corp. (RAD - Analyst Report) reported slight growth in comparable-store sales for Jun 2013, thereby breaking the declining trend of comps for the past four months. The company’s comps for the 4-week period ended Jun 29, 2013 inched up 0.7%, primarily driven by improved comps results at its pharmacy and front-end stores.

Pharmacy comps for June were up 0.9%, which included a negative impact of approximately 305 basis points from generic drug introduction. The results were also adversely affected due to a 0.2% drop in prescription counts. Additionally, the company’s front-end comps rose 0.4%.

Rite Aid reported total drugstore sales of $1.927 billion for the month, up 0.2% from the year-ago figure of $1.924 billion, with prescription sales constituting 67.4% of it. Third-party prescription sales accounted for 97.0% of pharmacy sales. .

For the 17-week period ended Jun 29, Rite Aid’s comps decreased 1.7% primarily due to a fall of 2.7% in pharmacy comps, partially offset by 0.4% rise in front-end comps. In the said period, total drugstore sales fell 2.1% to $8.191 billion from $8.365 billion in the comparable period of 2012.

Prescription sales comprised 67.5% of total drugstore sales, with prescription counts dropping 0.1%. Additionally, third-party prescription sales constituted 97.0% of the pharmacy sales.

Rite Aid, which trails Walgreen Co. (WAG - Analyst Report) and CVS Caremark Corp. (CVS - Analyst Report) in terms of store count, has persistently witnessed a downward sales trend over several quarters due to the introduction of lower cost generic (non-brand) drugs. Such non-branded drugs are less expensive in the market but generate higher gross margins for the company.

This is evident from Rite Aid’s performance in first-quarter fiscal 2014, when generic medication primarily drove its margin expansion. Going forward, this Zacks Rank #3 (Hold) stock is likely to focus on expanding its portfolio of generic medication, given the growing demand for such drugs.

However, Rite Aid’s generic drug sales could be dented by Wal-Mart Stores Inc.’s (WMT - Analyst Report) entry into the retail generic drug market. Due to Wal-Mart’s wide array of manufacturers in India, Israel, and the U.S., the mass merchant can offer the particular drugs at a more discounted price compared with the average $10.00 generic drug co-pay.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%