Walgreen and Rite-Aid: Poised to Win Market Share

Drug Stores were the first retail sector to report June same-store sales, as both Walgreen (WAG) and Rite-Aid (RAD) released monthly sales figures Friday. The sector continues to perform well, driven almost entirely by strong prescription demand, as front-end sales continue to be soft.

• Walgreen reported an increase of 9% in net sales and a 3.4% increase in same-store sales on top of a 3.4% gain in the year ago period. Comparable pharmacy sales increased 5.8% in June, while front-end same-store sales were down 0.9%, which the company said were hurt by softer sales of seasonal items compared to last year. Though front-end sales have been relatively weak compared to pharmacy sales, the company has only reported one month of negative overall same-store sales throughout the recession, posting a 0.9% decline back in November.
• Rite Aid reported a decrease of 2.5% in net sales and a 0.6% decrease in same-store sales on top of a 0.4% decline a year ago. Front-end same-store sales were down 4.5% while comparable pharmacy sales increased 1.4%. Front-end sales continue to disappoint, but pharmacy demand has stayed strong and prescription sales accounted for 67.9% of drugstore sales for the month.

The goal for both companies is to drive store traffic through pharmacy and health services, while improving the customer experience to improve front-end sales. Nearly 8 million customers a day are served between the two companies, so by leveraging their store networks and the convenience factor, there is certainly room to take market share away from competitors for items such as basic necessities, cosmetics, and accessories.

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Comments

[buoy:]

Glad to hear it. Boomers getting older, need drugs.

Jul 06 09:24 AM

[amdman:]

So when does Rite Aid go bankrupt, with the remains bought up by Walgreens or CVS.

Jul 06 09:13 PM

[way way:]

hhhhhheeeeeee,,,go rite aid


On Jul 06 09:13 PM amdman wrote:

> So when does Rite Aid go bankrupt, with the remains bought up by
> Walgreens or CVS.

Jul 07 08:03 AM

[Scrooder:]

You don't have to be a genius to predict growth in pharmaceutical and health product sales. The real question is will companies like RAD and be able to survive the increased competition in this area and be able to cut it's operating costs significantly. I'm skeptical that we'll see significant growth.

Jul 16 06:47 PM