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Rite Aid Ready to Report 2Q17 Earnings: What to Expect

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Part 2
Rite Aid Ready to Report 2Q17 Earnings: What to Expect PART 2 OF 5

Rite Aid’s Topline Growth Expected to Stay Muted in 2Q17

Rite Aid’s total sales expected to fall 2.4% in 2Q17

Rite Aid (RAD), which is scheduled to report its 2Q17 results on September 28, 2017. It’s projected to report a 2.4% YoY (year-over-year) fall in total sales to $7.84 billion.

Rite Aid’s Topline Growth Expected to Stay Muted in 2Q17

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During the first quarter of 2017, RAD’s total sales fell 4.9% YoY to $7.78 billion, missing the consensus by $390.0 million. The fall was driven by a 1.1% fall in comparable script growth, a fall in reimbursement rates, and a 1.5% fall in front-end sales comps (comparables).

Competitor Walgreens Boots Alliance (WBA), which reported results along with Rite Aid, registered a topline increase of 2.1% YoY to $30.1 billion.

CVS Health (CVS), America’s largest pharmacy chain, reported a 4.5% rise in total sales to $45.7 billion when it reported its results in early August. The company outdid Wall Street’s expectations by $320.0 million.

Rite Aid’s fiscal 2016 sales

For fiscal 2016, Rite Aid’s total revenue rose 6.9% YoY to $32.8 billion. Prescription sales accounted for close to 70.0% of total drugstore sales, while third-party prescription sales formed 98.2% of pharmacy sales.

Same-store sales during the year fell 2.2%, driven by a 3.2% fall in pharmacy sales. Slightly offsetting this fall was a 0.20% rise in front-end sales. The company’s pharmacy sales were negatively impacted by 180 basis points from new generic introductions during the year.

ETF investors seeking to add exposure to Rite Aid can consider the SPDR S&P Retail ETF (XRT), which invests ~1.0% of its portfolio in the company.

In the next part of this series, we’ll look at Rite Aid’s recent profitability and margins.

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