Rite Aid expects a lift from Albertsons
Rite Aid says its merger with Albertsons will create a differentiated health and wellness brand strategy that will drive sustained sales growth in the U.S.
In a fourth quarter earnings call with analysts Thursday, Rite Aid Chairman and CEO John Standley said the retailer has more opportunities to grow services within Albertsons stores as well as open some freestanding stores.
"During the fourth quarter, we made significant progress in a number of areas: our Retail Pharmacy Segment delivered strong results with an increase in Adjusted EBITDA over the prior year; our Pharmacy Services Segment is off to a strong start in the new commercial selling season; shortly after the quarter ended, we completed the asset sale of 1,932 stores to WBA; and we entered into a definitive merger agreement with Albertsons Companies to transform Rite Aid into a truly differentiated leader in food, health and wellness," said Rite Aid Chairman and CEO John Standley.
Rite Aid has said it will continue to convert its standalone pharmacies to “wellness stores,” which have expanded clinical pharmacy services, health and wellness products.
In the fourth quarter ended March 3, Rite Aid reported net income of $767.1 million, or 73 cents a share, compared to a net loss of $21 million, or two cents a share in the year ago period. Revenues were down 8.6% to $5.4 billion compared to $5.9 billion thanks to deteriorating retail pharmacy sales during the quarter. Same store sales from Retail Pharmacy continuing operations for the quarter decreased 1.7% over the prior year, consisting of a 2.3% decrease in pharmacy sales and a 0.6% in front-end sales.
"We are pleased that we've been able to drive improved operational performance through a stabilization of reimbursement rates, improvements in drug purchasing costs and a record number of immunizations which helped us deliver a higher pharmacy margin for the quarter," said Rite Aid President and Chief Operating Officer Kermit Crawford. "These areas of our business will continue to be key priorities as we begin our new fiscal year and work together to continue building momentum."
The company remodeled 38 stores during the quarter, bringing the number of wellness stores to 1,805, which accounts for about two-thirds of the chain’s store count. Another 132 Rite Aid stores are slated to be remodeled in fiscal 2019, Standley said.
Rite Aid said it expects sales to be between $21.7 billion and $22.1 billion in fiscal 2019 with same store sales expected to range from an increase of flat to an increase of 1% over fiscal 2018.
Rite Aid currently operates 2,548 stores in 19 states.