Store closures contributed to a bigger first-quarter net loss at Rite Aid Corp., but the company is counting on its expanded pharmacy operations as well as its beauty business and revamped loyalty program to help improve its results.
According to Rite Aid, higher facility exit and impairment charges driven by the company’s previously announced store closure decisions contributed substantially to the loss.
Rite Aid adjusted earnings per share beat a Zacks Investment Research analyst consensus estimate of a 70 cents per share loss while revenues came in ahead of the $5.73 billion sales estimate.
Revenues were $6.01 billion versus $6.16 billion in the year-before quarter, the company indicated.
Retail Pharmacy Segment revenues decreased 0.1% in the quarter year over year, driven by a reduction in COVID-19 vaccine and testing revenue as well as store closures, Rite Aid stated, offset by a gain in non-COVID prescriptions. Comparable sales for the first quarter increased 4.6% over the year-previous period, consisting of a 6.6% increase in pharmacy sales, partially offset by a 0.5% decrease in front-end sales, which include general merchandise. Front-end same-store sales, excluding cigarettes and tobacco products, were flat in the quarter year over year, the company noted.
In a conference call, Heyward Donigan, Rite Aid CEO, said that the company’s revised loyalty program had improved margin in the quarter.
Andre Persaud, Rite Aid executive vp and chief retail officer, said that the program would get major promotion before the end of July. The digital approach to the now points-based program is a more efficient use of margin-dollar investment and is more personalized, he said. Members get credit for online and physical store spending for both pharmacy and front-end spending.
Donigan also said that Rite Aid would continue to enhance its new front-end beauty assortment after encouraging results from the company’s new line item launches in the color cosmetics business.
In announcing the first-quarter results, Donigan said, “We continue to make strides on our journey to transform Rite Aid and define the modern pharmacy. In the first quarter, we increased our non-COVID prescriptions, reduced SG&A, built momentum at Elixir and delivered solid results across the business. The entire Rite Aid team looks forward to advancing our pharmacists’ role in improving health outcomes.”
Elixir is Rite Aid’s pharmacy benefit management company.