Key Rite Aid revenue metric slips in December
Key revenue metric slips 2.2 percent for drugstore chain Rite Aid in December
CAMP HILL, Pa. (AP) -- Rite Aid Corp.'s revenue from established stores slipped again in December, as cheaper generic drugs blunted the drugstore chain's prescription growth.
The Camp Hill, Pa., company said Thursday that revenue from stores open at least a year fell 2.2 percent in the four-week period that ended Dec. 29. Pharmacy revenue from those established stores fell 2.9 percent even though the prescription count grew by more than 4 percent, helped in part by flu shots and flu-related prescriptions.
Revenue from the front-end, or rest of the store, slipped 1 percent.
Rite Aid is the nation's third largest drugstore chain, trailing Walgreen Co. and CVS Caremark Corp.
Credit Suisse analyst Edward J. Kelly said in a recent research note that consumer worry about the fiscal cliff deliberations in Congress and aggressive promotions from competitors like dollar stores likely hurt drugstore front-end sales in December.
The introduction of generic equivalents to popular brand-name drugs like Lipitor has hurt pharmacy revenue but helped profitability for Rite Aid and its competitors over the past several months. Generics hurt revenue because they're cheaper than their brand-name counterparts. They boost profitability because they come with a wider margin between the cost for the pharmacy to purchase the drugs and the reimbursement it receives.
Rite Aid said total drugstore sales in the month fell 2.7 percent to $2.05 billion, with prescriptions making up nearly 63 percent of that total.
Rite Aid had 4,630 stores at the end of December, or 46 few than the same period in 2011.
Last month, Rite Aid reported its first quarterly profit since May 2007, as the drugstore chain said it filled more prescriptions and generic drugs helped its bottom line. The company earned $60.5 million or 7 cents per share, and its stock rallied after it announced the results.
Rite Aid shares climbed 8 percent in 2012 to close the year at $1.36. The stock fell a penny to $1.39 in Thursday morning trading.
