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Wednesday, June 30, 2010
Tags: Retail news   

Rite Aid June Sales Fall on Decreased Flu Revenue
Drugstore operator Rite Aid Corp. said Thursday that its total revenue and a key revenue indicator both fell in June compared with a year earlier, when consumers' worries about the swine flu outbreak boosted sales of flu shots and treatments. At stores open at least a year, Rite Aid said, revenue fell 2.5 percent in the four weeks that ended June 26. Pharmacy revenue from those stores dropped 3.1 percent, and prescriptions decreased by 3.7 percent. Sales of food, cosmetics, magazines, and other products fell 1.1 percent. Revenue at stores open at least a year is a key measure of a retailer's performance because it isn't skewed by results from stores that opened or closed over the year. The company said total sales for the four-week period fell 3.3 percent to $1.91 billion from $1.97 billion in 2009. Rite Aid ran 4,759 stores as of June 26, 63 fewer than at the end of June 2009. In morning trading, Rite Aid shares lost a penny to 97 cents. Earlier shares traded at a 52-week low of 94 cents.



Rite Aid Corp. Wednesday launched a new private brand, called Simplify, in the drugstore chain’s latest attempt to lure cost-conscious customers and becoming the latest retailer hoping to benefit from selling in-house products. Initial products under the Simplify brand include paper towels and bath tissues, along with berry-flavored drinks and bottled water. More household and food items are scheduled to be added to the line later this year. Rite Aid added that shoppers can watch informational videos about the products online to earn $1-off coupons. Videos on the site can be viewed by brand, category or manufacturer. Customers also receive a $5 Rite Aid bonus coupon when they earn 20 video credits.
Rite Aid joins competitors Walgreen Co. and CVS Caremark Corp. in its push into private label. Private label has become increasingly important to retailers during the downturn as consumer’s loyalty to brand-name products has waned in light of household budget restraints.
A weaker-than-expected consumer confidence reading Tuesday again highlighted the insecurity some consumers are feeling in the soft job market. Tuesday, the Conference Board said its Consumer Confidence Index fell to 52.9 in June, down from a revised 62.7 in May.  To meet changing consumer preferences, last week Walgreen said it plans to implement an initial selection of Duane Reade’s "Delish" private-label brand chain-wide this August. Walgreen, which completed its acquisition of Duane Reade in April, has long expressed admiration for the private label success of the New York City chain.  Building brand loyalty is key to many retailer’s; business plan. Rite Aid said the Simplify line is part of its plan to revamp its entire brand program with a "new look, new brands and added offerings to meet the needs of today’s value-driven consumer." In addition to the line, Rite Aid recently launched a loyalty card dubbed "Wellness Plan" to encourage new prescriptions.
Last week, Rite Aid reported its fiscal first-quarter loss narrowed, despite declining sales, as charges related to overhead and lease termination costs fell. Still, the company’s cost-cutting and refinancing have failed to lift it into the black since Rite Aid’s 2007 acquisition of Brooks Eckerd, which saddled it with debt just before a pull-back in consumer spending.



Rite Aid Launches New Private-Label Brand As Sales Slide

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