CAMP HILL, Pa. — Sales may have been flat overall, but a closer look revealed there was a lot to be positive about in Rite Aid’s fiscal first quarter 2012 earnings, as the company managed significant expense improvement and stronger same-store sales growth. Bottom line: Rite Aid narrowed its losses considerably, and that ain’t all expense control.
Driving the growth in same-store sales is Rite Aid’s Wellness+ loyalty card program, which company president and CEO John Standley told analysts during a June 23 earnings call, currently boasts nearly 40 million members. Card members accounted for 67% of front-end sales during the quarter, Standley said, and 62% of total scripts.
Importantly, Standley explained, Wellness+ card members are emerging as Rite Aid’s most valuable customers. Gold and silver members are shopping both sides of the store, he said, and 50% of these customers are visiting the stores every week, “so we’re getting frequency.”
In addition, Wellness+ members also have higher basket rings than nonmembers, and gold and silver members have higher basket rings than nonmembers. Other highlights during the quarter included expansion of the company’s new Wellness store format. Currently, eight stores are in operation, with the most recent openings in Mechanicsburg, Pa. — a suburb of Harrisburg, Pa., — and Newport Beach, Calif. During the call, Standley said the company was planning to open another Wellness store in the Harrisburg, Pa., area.
CFO, chief administrative officer and SVP Frank Vitrano said the company would renovate about 500 stores this year with components of various new formats, including the Wellness, Value and co-branded Rite Aid/Save-a-Lot stores, which the chain operates under an agreement with supermarket operator Supervalu. Vitrano said the company still was working through the overall profitability of the co-branded stores.
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