Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Drugstore chain retailer, Rite Aid Corporation’s (RAD - Analyst Report) comparable-store sales (comps) for the month of September (4 weeks ended Sep 28, 2013) escalated 1.9% from the prior-year period, primarily driven by better comps results at its pharmacy stores. This was however, partially offset by weak front-end comps performance.

Pharmacy comps for September were up 3.1%, which included a negative impact of nearly 100 basis points from generic drug introduction. Further, the company witnessed a 0.9% rise in prescription count at comparable stores. However, the company’s front-end comps reflected a marginal decline of 0.5%.

Rite Aid reported total drugstore sales of $1.935 billion for the month, up 1.9% from the year-ago figure of $1.899 billion. Prescription sales constituted 68.7% of total drugstore sales. Third-party prescription sales accounted for 97.1% of pharmacy sales.

For the 30-week period ended Sep 28, Rite Aid’s comps dipped 0.4% from the prior-year period. The fall was primarily due to a 0.6% drop in pharmacy comps, while front-end comps remained flat year over year. Prescription count at comparable stores rose 0.1%.

In the period, total drugstore sales slipped 0.7% to $14.449 billion from $14.545 billion in the comparable period of fiscal 2013. Prescription sales comprised 67.8% of total drugstore sales. Additionally, third-party prescription sales constituted 97.0% of 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 the first two quarters of fiscal 2014, when generic medication primarily drove its margin expansion. Going forward, this Zacks Rank #1 (Strong Buy) stock is likely to focus on expanding its portfolio of generic medication, given the rising 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 when compared to other drugstore chain retailers.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

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 Zacks.com. 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
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%